Yahoo!’s decision last week to shift its European headquarters to Switzerland from London is likely to be followed by other international firms, proving that the UK government’s crackdown on non-domiciled UK residents is hitting London’s financial health, accountants Grant Thornton said. The internet company announced last week it was quitting London as its European base and shifting to Switzerland. It employs about 700 staff in the UK. Although Yahoo! has not explicitly cited rising UK taxes on non-doms as a factor in pulling out of the UK, this issue must have influenced the move by a company which is likely to employ a significant number of ex-patriate US citizens in the UK, Mike Warburton, a senior partner at the accountants and a respected commentator on tax affairs, told WealthBriefing. “The non-dom [tax] issue has caused a lot of businesses to reassess. In the past, sheer inertia would have kept them in the UK but now they are having to act. The Swiss are going all-out to get these companies. For the Swiss, this is like Christmas has come early,” Mr Warburton said. “This whole non-dom issue has been very badly handled; it is like putting up a sign on our front door saying 'foreigners are no longer welcome here', which is just not true,” he said. Even though the government had softened earlier, potentially damaging proposals to tax non-doms and their assets, the damage to the UK’s reputation has been done, he added. A spokeswoman for Yahoo! declined to comment on specific tax or regulatory issues, but told WealthBriefing: “We have begun a programme to relocate our business headquarters to Europe to enhance our competitiveness and our financial effectiveness.” A report in the Financial Times described Yahoo!’s shift as “Project Yodel”. The FT said the move was made to take advantage of lower Swiss corporation tax. Corporation tax averages 20 per cent across the different rates in the Alpine state’s cantons. Last week, Mr Darling confirmed he will, from 6 April, levy £30,000 annually on non-doms if they wish to retain this status and thereby not pay taxes on their worldwide assets. A number of international companies have quit the UK in recent years, including the Lloyds insurer Catlin, which has moved to Bermuda; and the US foods group Kraft Foods, which like Yahoo! has gone to Switzerland. Accountants Ernst & Young recently argued that the increasingly unpredictable path of UK tax policy was hurting the country's competitiveness.