A Flurry of Activity

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Case 1

An early morning dash to Central London to see a new client recommended by a solicitor friend.

It’s a newly formed company, which is the UK subsidiary of a reasonably large offshore parent.

The two directors have various issues regarding their residence and domicile statuses, but the really vexing issue is the proposal to provide them with shares in the UK company and share options so that their shareholdings could reach 20% each.

I observe that a share option that is unapproved by HMRC would be disastrous from a tax (and NICs) perspective as the growth in value of the underlying shares would all be exposed to income tax (and NICs) when the options are exercised.

The UK company cannot have an approved share option scheme in view of its subsidiary nature.

As the shares are not currently especially valuable, the better approach seems to be for heavily restricted shares to be issued now, but with the directors and the company jointly electing for the restrictions not to be recognised for tax purposes.

Then, the (currently modest) value of the shares on an unrestricted basis will be charged to tax, but no tax charges will be triggered when the restrictions are lifted and the only future tax exposure will be to CGT when the shares are sold.

Another client and a happy one!

Case 2

A medium sized City law firm have asked me to talk to their team about tax planning ideas following the Emergency Budget.

Into the Lion’s Den I go; will my audience know more about such matters than me?  I speak for an hour and a quarter and am well received (phew!).

Of particular resonance is the concept of using so-called incorporation relief to enable personally owned investment properties to be transferred to companies, so as to enable rental income to be accumulated at 21% (soon to be 20%) corporation tax rather than 50% income tax.

The consequential CGT and IHT planning opportunities also tick a few boxes.

The lawyers seem to have many clients who will want to find out more about such ideas.  Excellent!

Case 3

A client calls in to discuss his marital difficulties.  Having been there myself, I am able to provide some practical guidance and emotional support.

The client is interested to learn that inter-spouse transfers of assets are only CGT exempt if undertaken in the year of separation.

It is clear that certain matters need to be tidied-up without too much delay.  Unless things take an unexpected turn for the better, I advise him to seek guidance from my friendly divorce lawyer as soon as possible.

More news awaited.

Case 4

A solicitor contact has an offshore-based client with valuable onshore properties, which he would like to transfer to an offshore incorporated company.

He is (quite rightly) concerned about the Stamp Duty Land Tax implications of such a transfer.  Can we find a solution to this problem?

It seems likely that we may be able to utilise reliefs for transfers of properties into and out of partnerships, about which we have previously consulted Leading Tax Counsel and obtained a favourable opinion.

The client wants to undertake the transaction in a manner that differs from the transaction that was previously “cleared” by Tax Counsel, but it seems that the same relieving provisions should apply, which is encouraging.

The way forward is clear; Tax Counsel will be asked to opine on the precise circumstances of this client’s case, and we will only proceed if he agrees with our interpretation of the law in this complex area.

The solicitor will pass on the news to his client and we await his instructions in this regard.  An SDLT saving of some £300k is at stake, so getting Tax Counsel to confirm the position has to be the wise course of action.

Case 5

A long drive to the Cotswolds to meet the FD of a potential client who has lost confidence in his existing auditors and tax advisers.

The situation is relatively complex as the company trades throughout the world and has interests in non-UK companies, some of which will have to be consolidated for UK accounts purposes and some of which will not.

There are various issues concerning transfer pricing and company residence concepts which will need to be considered carefully, and a certain amount of restructuring is likely to be needed.

Happily, the FD seems convinced of our accounting and tax expertise and indicates that we will be appointed, subject to our agreeing the likely level of our fees with him.

I am sure that agreement can be reached on that front…

The weekend arrives, but there will be no rest for me as the gardener has broken his ankle and it will now be up to me to tend the vegetable garden and manage the pigs and chickens.

Still, we’ll have fresh eggs and bacon for breakfast and some tasty pork for Sunday lunch.

There are some benefits of hard manual labour!

And so to bed…

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