Before last Autumn few people had heard of Res Non Dom tax status. Essentially what it means is that people legitimately working in the UK who were born overseas and whose principal place of residence for most of their lives is beyond these shores, ensure that their non-UK earnings are not taxed in the UK as well as in their overseas home. If you worked abroad you would hope to be treated so equitably too.

It never used to be much of an issue. But as Britain's economy has grown, and as London has established itself as the principal global financial centre at the expense of New York, more and more foreign nationals have made their homes here. They generate exceptional wealth, employ thousands of people, contribute to our society, but just don't pay tax on their personal earnings that come from beyond these shores. Some premiership football players also qualify as Res Non Dom. Its a bigger population than you might imagine.

But the rules can be bent a little so that Res Non Dom individuals have their UK earning paid into an off shore bank account meaning that they are not taxed in the UK at all. They can even bring interest from those bank accounts back into the UK to pay mortgage interest on UK owned property. There's something slightly unethical about that, but the benefits of having these entrepreneurial wealth generators in the UK vastly outweighs the disadvantages.

When in October 2006 I spoke at the Conservative Party Conference calling for the abolition of Inheritance Tax I hadn't costed the implication. But I knew it was popular and right. So when the Shadow Chancellor, George Osborne, pledged at the Party Conference in 2007 to raise the IHT threshold so that it is a tax paid only by millionaires, I was delighted. And Osborne's stroke of genius was that he had costed it out. He dealt with the ethical issue of resident but not domiciled persons living and working in the UK, and largely generating very substantial earning here, electing to register for RND status with a flat charge of £25,000. As a result the UK tax authorities would not seek to tax their non-UK earnings. RND individuals would be contributing what would be, to them, a small charge that would mean that they are contributing to the civil society in which they live. The additional revenue raised would fund the small tax give-away of inreasing the IHT threshold. As with all of Osborne's principles on tax, this was simple, flatter and fair.

So when Gordon Brown's puppet, the Chancellor of the Exchequer Alistair Darling sought to ape Osborne's policy in his pre-Budget Report, many laughed but suggested that imitation is the sincerest form of flattery. But plagiarism is usually found out, and often leads to the student being relegated to the bottom of the class.

Darling's imitation was nothing short of incompetence. Like all Labour's tax changes over the past 11 years it was neither simple nor fair. Darling used this tax change to complicate and obfuscate. He rushed the policy in, despite and contrary to a long tax policy review that had been underway for five years. And he consulted with no one in the City who would actually understand. So, no wonder the maverick government minister Lord Digby Jones warns now that these proposals may lead to RND individuals in the UK swiftly selling their assets and moving to Geneva. Darling did not do his homework, he has sought to undermine the attractiveness of London to global investors, and has made himself, yet again, seem unfit for purpose.

Writing in today's Sunday Times Michael Spencer, the chief exec of ICAP and Treasurer of the Conservative Party, and perhaps the most highly respected individual of his generation in the world of Financial Services, writes supporting the sense of George Osborne's proposals last year. Michael asserts how Labour's RND proposal is not a pale imitation of the Conservative's plans. It is a tax raid, dangerous for London's reputation, and proves how out of touch with City opinion this government has become. Well said Michael.

Read his article here: http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article3341747.ece