Below are some examples of the opportunities and challenges we respond to on behalf of wealth owners, their families and their other advisers.
We helped our client – an FCA regulated individual – settle outstanding tax on inherited funds in a Swiss account.
We used a disclosure scheme that offered reduced penalties and guaranteed immunity from prosecution. He is still an FCA-regulated individual.
Our European client had not declared UK accounts and assets in his home country. We proved that, due to withholding tax and double tax treaty provisions, he had no more tax to pay.
He made a full disclosure and his tax affairs are now up to date.
Many people inherit historic undeclared funds either directly or through trust structures. The key advice is to act sooner rather than later. If there is a problem it won’t just go away.Murray North, Partner BLP – Private Client
Your children will not thank you for leaving them your undeclared assets; clean them up during your lifetime.Paul Whitehead, Partner BLP – Private Client
Our UK client sold his interest in a trading company for a mix of cash, loan notes and shares.
We helped him reduce his tax bill on the cash proceeds to 10% by using entrepreneur’s relief and deferred the remaining capital gains tax by rolling it over into other investments.
Our non-UK domiciled client wanted to sell valuable works of art and use the proceeds to make gifts to her adult children.
We advised on the most tax-efficient route, saving her both capital-gains and inheritance tax: export it, sell it in Geneva, and complete the gifts offshore.
A substantial family trust with beneficiaries in several jurisdictions wanted to find the most tax-efficient way to provide for the beneficiaries.
We showed them that larger one-off payments to certain family members could be both tax-efficient and simplify the structure, leaving the trustees to invest for the long-term benefit of the family.
We helped a family tidy up a number of offshore trusts that had been operated over many years. We analysed the tax aspects of the trusts, their powers, and their investments. We then merged or wound up three trusts and recommended different distribution policies for different beneficiaries.
The end result was a single substantial trust for each branch of the family: the trusts met beneficiaries’ long-term needs and were more tax-efficient, cheaper to run and better diversified.
Offshore trust structures need to continuously adapt to meet the needs of the beneficiaries and comply with changing tax and regulation.Martin Paisner, Partner BLP – Private Client
Offshore trusts still offer significant tax benefits, but in fewer circumstances.Damian Bloom, Partner BLP – Private Client
We helped our UK domiciled client plan how assets, that included a trading company and a property portfolio, should be distributed after her death. First we drafted a Will that would pass her business to her children and give her husband a trust interest in the rest of her estate; all tax-free.
Then we did two things to make sure the trust assets would be used to meet her aims. We gave the trustees power to redirect assets – to save tax or take account of a change in her family’s circumstances – and prepared a letter of wishes that set out how she wanted her family to benefit.
Once a non-UK domiciled person has lived in the UK for sufficient years, their worldwide assets will be subject to UK inheritance tax.
We helped our client put assets in trust – before he passed the threshold – to protect them from UK inheritance tax, even if he remained in the UK. He also gifted some UK assets to his adult children and put life insurance in place to cover any inheritance tax on those gifts.
One of the key aims for inheritance tax planning for married couples is to defer any liability at least until the death of the survivor. Where multiple jurisdictions are involved, it is also one of the key challenges.Damian Bloom, Partner BLP – Private Client
Well advised non-UK domiciled individuals can mitigate their exposure to inheritance tax with simple planning, provided it is done in time.Simon Phelps, Partner BLP – Private Client
Our UK client sold a business he’d taken 20 years to build up. He wanted to invest part of the proceeds and make some gifts to his family – in a tax-efficient way.
We helped him set up a UK personal investment company which would be able to reinvest profits tax-efficiently. We advised him to capitalise the company with debt and equity, and gift shares to family members. This gave his family income-producing assets and reduced the likely inheritance tax bill that would arise on his death. He was also able to stay in control of the investments and use loan repayments to extract value tax-efficiently.
If a UK resident exercises “central management and control” of a non-UK company it may have to pay UK corporation tax.
We helped a non-UK domiciled client who lives in the UK and owns a non-UK company work within these rules. The company had non-UK directors and we put in place protocols and procedures for how the company should make decisions outside the UK. As a result, the company was able to remain securely outside the UK.
Getting tax-free access to a non-UK pension before retirement age can be problematic.
We were able to restructure one client’s pensions so that he could draw his non-UK pension without a significant charge to UK tax.
The key is balancing tax efficiency with investment flexibility.Damian Bloom, Partner BLP – Private Client
The UK tax regime still encourages non-UK individuals to keep their assets outside the UK.Simon Phelps, Partner BLP – Private Client
Protecting clean capital is a key part of any tax planning. Clients always need more of it than they expected.Damian Bloom, Partner BLP – Private Client
We helped a wealthy Middle Eastern client structure a £70m portfolio of UK residential property.
The solution included personal ownership for properties which the family would use, with a mix of debt and life insurance to minimise inheritance tax, and offshore structures for the rental properties. We keep a close eye on changes to residential property tax rules - so we can keep the structure up to date.
Our UK client came to us with plans to grow a rented property portfolio. We showed her how a simple UK company structure would mean a lower tax bill, allowing more of the profits to be re-invested. Money she lent to the company could also be repaid to her tax-free.
Transferring existing properties into the company would not have been tax-effective, so most of the original portfolio properties remain in her name.
The piecemeal approach to taxation of UK residential property has led to an unhelpfully complex patchwork of overlapping tax charges.Damian Bloom, Partner BLP – Private Client
It’s important to get a property holding structure right from the outset, as moving properties later can trigger significant tax.Elizabeth Bradley, Partner BLP – Head of Corporate Tax
Our client, a non-UK domiciled UK resident, was a private equity manager.
We created a non-UK trust structure that would hold his carried interest investment in the partnership and indefinitely defer tax on gains. The trust could be used to provide for his family in the long term.
Our clients, partners in a UK private equity fund, planned a new fund that would be established with a substantial investment from a sovereign wealth fund. The partners would operate the new fund and would receive a percentage interest in it.
We advised on the tax implications – particularly in light of the risk that part, or all, of their holding could be treated as employment income.
The low tax rates on private equity returns have long been in the sights of the Treasury.Damian Bloom, Partner BLP – Private Client
“Protecting clean capital is a key part of any tax planning. Clients always need more of it than they expected.”Damian Bloom, Partner BLP – Head of Private Client