The co-founder of one of Britain’s best-known dot-com companies yesterday launched a withering attack on plans for a £30,000-a-year tax on nondomiciled residents.

Consultation on the proposals, which the Treasury hopes will net an additional £500 million a year, closed yesterday. City organisations have inundated the Government with critical responses.

Jason Gissing, co-founder of Ocado, told The Times that the home-shopping group would not have got off the ground in the current climate, given the Chancellor’s proposed crack-down on overseas tycoons.

Mr Gissing hit out at Alistair Darling’s “poor judgment” and said that there was a growing feeling that he “could not be trusted”.

The Treasury proposed that nondoms pay £30,000 a year in tax after they have lived in the UK for more than seven years.

The Government acted after the Conservatives paved the way by raising the issue, a move that, The Times has learnt, has infuriated some Tory donors.

Nondoms also face new capital gains and asset taxes. Previously, private equity bosses and City figures had been accused of avoiding tax on their wealth by using nondom status.

Ocado, which started in 2002, delivers Waitrose goods to 15.5 million people. It is understood to have raised half of its £300 million start-up funding from nondoms.

Mr Gissing said: “We are irritated because the Chancellor has increased capital gains tax in a knee-jerk reaction to criticism of the private equity industry. [The tax] actually penalises people like us who have started a business, created 3,000 jobs and created a new service. Then he says he’s going to penalise the nondoms who finance businesses like ours and get them off the ground.”

Simon Walker, chief executive of the British Venture Capital Association, yesterday gave warning that the proposed changes are already harming the UK’s reputation. “My worry is that the welcome mat is getting rather worn out,” he said. “When I was in New York last month the impression I got from American firms is that London is not as welcoming as it used to be.”

The private equity industry stands to be hit hard by the new regime, since many of the big firms in London, such as Blackstone and KKR, are based in the US and employ many American executives in the UK. One source said that it was not the partners in the big firms who would leave Britain but the many more junior executives who earn £200,000 to £300,000. They would see the proposed £30,000 tax as a significant increase in their outgoings.

The CBI, the London Investment Banking Association and many other City bodies said that they had responded to the Treasury consultation.

The CBI said that nondoms contributed more than £7 billion a year to the Exchequer and that there was a “great deal of room for error” in the Treasury prediction of a £500 million annual gain from the new taxes.

The CBI estimated that up to 8,000 of the 120,000 registered nondoms could leave the UK to avoid the payment if it is introduced, rather than the 3,000 estimated by the Government.

Some of the Conservative Party’s highest-placed City donors are thought to be livid that it was the Tories who raised the possibility of a flat-rate tax for nondoms. The Tories proposed a £25,000 annual charge, but, unlike the Government’s plan, they did not intend to include scrutiny of offshore assets owned by nondoms.

One donor said: “When the Conservatives came up with the idea of a charge I know a lot of people were very, very annoyed because they felt that the party was opening up Pandora’s Box and giving Labour the opportunity to move on the issue.”

According to a survey published yesterday by the City of London Corporation, the UK tax system has lost its competitive edge at a time when rival nations have reduced their tax rates. It said the UK had an “unpredictable and uncertain” approach to tax, with many of the 35 City firms questioned citing nondom changes as negative.

In a separate survey of finance professionals around the world, the corporation found that although London is still the leading global financial centre, New York is close to overtaking it.

Ins and outs of the tax rules for non-doms

Existing tax rules:

Non-doms do not pay income tax on overseas income or gains.

Non-doms pay income tax, capital gains tax and inheritance tax on all their UK income and assets.

Income tax is charged depending on what they earn in the UK.

Non-doms must also pay inheritance tax at 40 per cent on their UK estate if it is worth more than £300,000, even if they no longer live in the UK.

Government’s proposals:

All non-doms to lose personal allowance for income and capital gains tax immediately, unless agree to be taxed on worldwide assets.

£30,000 annual charge for non-doms once they have lived in the country for seven years.

Tax on capital gains made on UK assets in offshore trusts.

Conservatives’ proposals:

Flat charge of £25,000 for all non-doms. This charge would be creditable against foreign tax.

The debate rages

Richard Lambert, CBI director-general:

“At a time of growing economic uncertainty it is vital we do all we can to keep wealth generators in the country, not make them feel unwelcome. Non-doms have been an important part of the UK’s success andadministrations have provided a warm welcome. Partly as a result of their presence London is the world’s leading financial and business centre”

Roger Jeary, director, Unite trade union:

“Unite supports Government plans to tax the non-dom residents who have been able to evade their tax obligations for too long. We believe these people should pay their fair share. This includes the estimated 75 per cent of senior staff at private equity firms who, by their own admission, pay less tax than their cleaners”

Matthew Elliott, TaxPayers’ Alliance chief:

“Some people wrongly think that hitting non-doms could benefit ordinary taxpayers, but this is not the case. Hurting Britain’s ability to attract the internationally mobile would be a disaster for the economy”

Simon Walker, chief executive, British Venture Capital Association:

“I don’t want businesses leaving London and setting up shop elsewhere in Europe because of uncertainty about tax rates, about the treatment of foreigners or just because the welcome mat was getting a little worn”

Ian Harrison, director, London Investment Banking Association:

“We put in a substantial response, expressing our concern over the way the consultation was handled, with insufficient time to explore the key issues, and also over some of the specific proposals”

Frank Haskew, head of tax, Institute of Chartered Accountants in England and Wales:

“Our view is that there is fundamental problems with the legislation. Potentially, anyone coming to the UK who has investment income of more than £1,000 from overseas will almost inevitably have to fill in a UK tax return”