Below are some examples of the opportunities and challenges we respond to on behalf of business and wealth owners, their families and their other advisers.
Our client, a non-UK resident and non-UK domiciled investor, wanted to build a portfolio of UK residential rental property.
We advised her to invest via a non-UK company for tax and structuring reasons, and use UK-based finance to leverage her investment.
Our client, a specialist in residential developments, bought a central London office and planned to convert it into luxury flats.
We advised on planning and tax-structuring at the start of the project. Then we helped our client put together a package of warranties for the development that helped maximise the final sale prices.
From 2017 an offshore company will not protect non-UK domiciled individuals from UK inheritance tax on UK residential property.Simon Phelps, Partner BLP – Private Client
Non-UK investors buying UK real estate should look at diversified holdings through funds, or diversified property companies, as well as direct investment.Chris de Pury, Partner BLP – Head of Real Estate
Our client, a non-UK domiciled UK resident individual, is a partner in a private equity firm. He was concerned that given changes to tax rules an offshore trust was no longer the right choice for his UK private equity holdings.
We were able to confirm that offshore trusts are still tax-efficient – mainly due to protection from capital gains tax. The structuring of his holdings is being kept under review given the risk of legislative change.
Our client, a UK resident non-UK domiciled private equity investor, planned to make a series of investments.
We advised her to make some investments from family trusts – a tax-efficient approach that would help mitigate tax on long-term capital gains. Then we advised the trustees on how to meet their fiduciary obligations, taking into account that private equity assets carry higher risk and are less diversified.
As a private equity investor it’s important to consider your exit, from both a commercial and tax perspective.Adam Bogdanor, Partner BLP – Corporate
The taxation of the private equity industry has to be considered in the context of the value that the industry brings to the UK.Damian Bloom, Partner BLP – Private Client
HMRC sought to prove that our client’s non-UK company was actually controlled from the UK by a UK resident shareholder – and should pay UK corporation tax.
A few years earlier we had advised our client on this issue. We made it clear how important it was to follow decision-making procedures, to be able to evidence that the company was not controlled from the UK. The company had followed these procedures sufficiently accurately to enable us to successfully refute HMRC’s claims.
Our clients were the trustees of an offshore trust that held UK commercial property. HMRC took the view that the work of a UK beneficiary of the trust had driven the growth of the trust’s assets.
If this was true the trustees or beneficiary could be liable for UK tax on the profits of the business. We were able to show that the UK beneficiary had been contracted to the business, and paid by the trust on commercial terms. Our client was able to resist HRMC’s claim.
Our client, the family owners of a global brand, were earning an increasing amount of income from brand licencing.
We helped them set up non-UK vehicles that would own the intellectual property rights, and licence business entities in different countries to use the brand. This meant that only the revenues from the UK business would be liable for UK tax. This arrangement needs ongoing monitoring, given the focus of tax authorities.
Our client operates a property development business from the Channel Islands that invests mainly in London.
We put in place a set of operational procedures and contractual arrangements, designed to make sure that key business decisions were made and documented in the Channel Islands, and so make sure that the business would not be treated as controlled from the UK. The client is aware that tempting short-cuts can lead to significant tax costs.
It’s increasingly important to make sure that the way the business is run reflects the planning from the outset. Short cuts often lead to tax costs.Elizabeth Bradley, Partner BLP – Head of Corporate Tax
A wealthy family sold part of their business and wanted to invest some of the proceeds, along with third-party investors, in a series of start-ups.
We advised them to use joint venture agreements which allowed them to lead the process, with third parties investing alongside them. The agreements also enabled them to call down an amount of capital when required.
A family office that managed a non-UK family fund wanted to allow third parties to invest in the fund.
We advised them on the regulatory and tax issues, how to structure the fund, and made sure that they would keep control of key investment decisions.
Family offices can develop considerable investment expertise and, understandably, they want to capitalise on that by offering their services to third parties.Murray North, Partner BLP – Private Client
A very successful entrepreneur built up an insurance business and was considering how to exit.
Our corporate team worked with him over several years to update the contracts with key third parties and the management team, and dispose of peripheral businesses, in order to prepare the business for a flotation.
A family wanted to float a substantial media business in order to raise money to expand it.
We advised them on their options and they decided to go for a private placement of shares in order to raise the capital they needed without the cost and complexity of a full flotation. The placement financed a significant expansion of the business.
The sale of the family business is a game-changing event for a family as regards lifestyle and family dynamics as well as tax. It is important to think about the long term.Murray North, Partner BLP – Private Client
Tax reliefs can be lost as a business grows. It’s important to use them when you can.Damian Bloom, Partner BLP – Private Client
A Hong Kong client wanted to acquire a British hotel chain.
We set up a non-UK company to make the acquisition and advised on the financing and the transaction. The structure mitigated UK income tax and inheritance tax and provided limited liability protection. We then set up a UK operating company to run the hotel business, and drafted the associated contracts.
Our non-UK client planned to move to the UK and invest in UK shopping centres. We recommended a tax efficient – and practical – way to manage his investments.
We advised that, given the low rate of UK corporation tax, he set up a UK group structure that held each property in a separate company; operating in the UK via an offshore company can have tax advantages but tends to complicate day-to-day operations.
Commercial property has not been hit by most of the new taxes that have been imposed on residential property.Elizabeth Bradley, Partner BLP – Head of Corporate Tax
Low UK corporation tax rates mean that in many cases planning can be both simple, and tax efficient.Damian Bloom, Partner BLP – Private Client
“It’s increasingly important to make sure that the way the business is run reflects the planning from the outset. Short cuts often lead to tax costs.”Elizabeth Bradley, Partner BLP – Corporate Tax