Another Exciting Week

Another exciting week – almost as exciting as watching the England football team achieving morale-boosting draws against far superior opposition.  Clearly, we are on a roll.  Here’s a few snippets of my activities:-

Case 1

A drive down to deepest, darkest Surrey to visit a potential client – a professional limited liability partnership with various tax and accounting issues.

They have various well regarded and well paid “associates”, whom they would like to bind into the firm.  I suggest making them members of the LLP, albeit on a non-equity basis.

They get more perceived status, have their working relationship governed by the LLP agreement rather than by their contracts of employment and become “self-employed” for tax and NICs purposes, thereby giving them and the LLP access to significant savings of employer’s and employees’ NICs.

Conversely, certain service providers are being treated as self-employed, a status that HMRC might not willingly accept!

They are advised to tighten their procedures in this regard, as this is a status dispute waiting to happen.  The workers will be “encouraged” to operate via limited companies, which will protect the LLP and should provide the workers with tax and NIC saving opportunities.  The equity members of the LLP are concerned about their rising personal tax liabilities following tax changes made with effect from 6 April 2010.

They will consider introducing a limited company as a member of the LLP to act as “staff partner”.  They will then be able to accumulate profits at (low) corporation tax rates rather than much higher income tax and NIC rates.

Success!

They like the cut of our jib and we are appointed.  A good way to start the week.

Case 2

Back to the office to check the post.  A letter from HMRC’s Capital Taxes Office awaits my attention.

Good news (again)!  HMRC had been trying to charge inheritance tax (“IHT”) on the value of “family company” shares in the estate of a client who had died suddenly.

They said (to the shocked executors and their solicitors) that IHT business property relief was not due because the shares in question had been owned for less than two years.

We pointed out that the shares in question had been issued as part of a reorganisation of the company’s capital structure in respect of which HMRC’s clearance had been sought and obtained.

Thus, the two-year period had to include the period of ownership of the previously held shares.  HMRC’s letter was to confirm that they now accepted the point and that no IHT would be levied, resulting in grateful and relieved executors.

Case 3

A dash up to the City of London to meet clients concerned about their UK property ownership and the likely increase in the rate of CGT on non-business assets.

It’s all very complicated as certain family members seem to own properties that are occupied by other family members!  There is no time to do anything before the Emergency Budget on 22 June, so the only sensible course of action is to “wait and see” and deal with property transfers after 22 June 2010 but before 6 April 2011.

Gifts will not trigger SDLT charges, and gifts via trusts might avoid CGT.

A cunning plan will be needed to minimise taxes.

Case 4

Another day, another client who wants to make gifts of assets (this time of shares in a property company) without triggering onerous tax charges.

IHT should be no problem, as the company’s business is mainly property development.

But CGT on a gift to an individual will be very difficult as the company does have non-trading chargeable assets (investment properties).

A straight-forward gift would be a CGT disaster, but a gift via a trust could be made without triggering IHT or CGT.  Client is impressed but need to consider all the options, one of which might be to arrange for the company to buy-in his shares so as to provide him with some cash.

Further detailed discussions and a clearance application to HMRC will be required.

Case 5

A client urgently wants to establish a remuneration trust before the Emergency Budget

Can we deal with this in time?  Of course we can!

Lot’s of documents are drafted and bankers are teed-up to ensure that matters can progress by close of business on Monday.

Case 6

We are joint sponsors of a large Breakfast-briefing seminar at a local hotel, in conjunction with a major bank.

The bank’s chief economist talks about the state of the economy (dire, apparently) and I talk about the likely tax changes to be perpetrated by the Coalition Government.

I relish the chance to be a prophet, but can’t help thinking that it would be more fruitful for the audience to wait for the official pronouncements on Tuesday 22 June.

Anyway, the audience seems to be appreciative of our comments and a couple of people want to meet formally after the Emergency Budget, to fine-tune their fiscal plans.

Weekend arrives – I have to get home to prepare the garden for the annual office Sports Day.  I wonder if the lads and lasses will be able to kick a football about better than the England team!  Probably.

And so to bed…

Talk to Barnes Roffe today
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