Three leading businessmen yesterday called on the Chancellor to abandon his tax changes on capital gains and non-domiciled residents, in the latest of a string of attacks by the City on the proposals.

Lord Brittan of Spennithorne, a former Home Secretary and European Commissioner, Philip Yea, chief executive of 3i Group, the private equity firm, and Michael Snyder, policy chairman of the City of London Corporation, insisted that the proposals would damage London's ability to compete with other financial centres.

Mr Yea and Mr Synder are members of the Chancellor's high-level group that advises Alistair Darling on City issues.

Their warning came after damning comments this week from Mervyn Davies, the chairman of Standard Chartered, who is a member of the Prime Minister's business council, and Alan Yarrow, vice-chairman of Dresdner Kleinwort, another member of the high-level group.

The business community is piling the pressure on to Mr Darling in the run-up to his first Budget next Wednesday. Lord Brittan said that Mr Darling would find himself in “serious hot water” if he pushed ahead with plans for a flat annual tax of £30,000 for non-doms, to be paid after they have spent seven years in the UK.

Lord Brittan said that the changes to capital gains tax (CGT), which would involve a flat 18 per cent tax introduced in place of taper relief, would stifle entrepreneurism. He said: “The degree of anger in the business community is much greater than the Government had anticipated.”

Mr Yea said that the issue of City competitiveness was too important “to be messed around with on a short-term politic basis ... The Conservatives are as much to blame as the Government is on this. The agenda has become much too politicised and has created the need for reaction and counter-reaction on much shorter timeframes than you would normally expect on such major policy issues.”

However, Mr Yea said that the City's reputation had already been damaged, regardless of whether Mr Darling implemented the planned changes in the Budget.

Mr Yea said: “I think the second that successful policy looks like it might get changed then there is an impact...because the big thing that businesses look for is certainty and up until now the received wisdom was that London was a great place to do business. All that looks a little different now.”

Mr Snyder said that if the Chancellor insisted on pushing through the £30,000 non-dom tax, which is expected to net the Exchequer an extra £500 million a year, he should strip away other proposals that accompany the new tax such, as taxes on capital gains made on UK assets in offshore trusts. “If we got rid of all the froth, it may not be that unattractive a proposal,” he said.

Mr Synder said that he was hopeful that Mr Darling would “clarify” his changes to CGT in next week's Budget. He also called on the Chancellor to abolish stamp duty on share transactions and listen carefully to responses to an ongoing consultation on corporation tax.

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