This note describes a day in the life of a chartered tax adviser.
I arrive at my office in Chertsey at 8.30 and proceed to review e-mails that have arrived overnight. An interesting alert is received from another professional organisation upon HMRC having received a list from a “whistle-blower” of the names, addresses and account balances of every British client with an account held with HSBC in Jersey; I resolve to produce a blog at the weekend upon the advisability of making “voluntary disclosure” to HMRC to avoid the danger of the imposition of penalties or even criminal proceedings for persons who have failed to fully disclose taxable income or gains either within or without the UK.
My first ‘phone call of the day is from a client (A) who has formed a UK company to purchase an attraction associated with a famous London landmark. A has interests in a number of varying commercial projects and embarks upon each deal with great tenacity despite his avowed intention to wind-down in the near future. A needs the company to be registered for VAT as a matter of urgency and my colleague, Kirstie, proceeds with on-line VAT registration after having established from A’s assistant the data that is required for the VAT registration. I proceed to discuss with A how his investment in the company is to be structured as between share capital and loan and point out the ability to relieve any loss arising from the shares as a deduction from income whereas any loss arising from the loan proving irrecoverable is only likely to produce a loss for Capital Gains Tax (CGT); we also discuss the ability to obtain Entrepreneur’s Relief upon the disposal of the company’s shares to limit the rate of CGT to 10% of any gain.
Virtually straight after having ended my call with A, I receive a call from another client (B) for whom Fuller Spurling act in relation to the personal taxation of B and his wife as well as handling the accountancy and taxation matters for 2 companies of which B and his wife are director/shareholders. B indicates that he has an interest in another company and the fellow-owner of the other company is looking to reduce his involvement and B is looking to increase the return that he can achieve from the company reflecting his increased workload. B indicates that he would be looking to sell the company in the future but wishes to minimise the fiscal burden upon its profits in the meantime. We discuss the possibility of claiming tax relief on R&D costs and also the possible use of tax mitigation solutions such as investment in the UK film industry (although I stress my inability to offer B investment advice due to the constraints of the Financial Services Act). However, I point out that the drive to reduce taxable profits and, thus, Corporation Tax payable by the company could have an adverse impact upon the ability to obtain the maximum consideration for the company whenever B finds a purchaser for the company; B accepted the point. I arrange to meet with B at his home in the following week to fully discuss how his objectives are to be best achieved.
After having reviewed the Corporation Tax Return of a company that provides the services of an international sports personality, I receive a call from a lady (C) who has been recommended to approach me by an offshore private bank with which I have a number of mutual clients. C is looking to obtain advice upon an Inheritance Tax (IHT) issue that she has and it is arranged that C will visit me at my Chertsey office in the following week to outline her issue and ascertain what help I can provide. I stress to C that there is no charge for the initial meeting and no obligation upon her to subsequently instruct Fuller Spurling to act for her.
After discussions with my colleagues upon various client issues, advising by e-mail another firm of accountants upon how to resolve an issue relating to a family Trust created by one of their clients and sending a letter to an offshore provider of corporate services confirming the basis upon which advice was given to a mutual client to purchase a UK property through an offshore structure, I leave my office to catch the 13.23 from Egham to Waterloo for 3 meetings that I had previously arranged in London. South West trains are punctual as usual!
My first meeting at 14.30 is with a client of mine (D) from whom I have not heard for some time and who approached me at quite short notice to meet with him. D is a young sportsman who was pleased to have recently been granted UK citizenship. D is a high-earning individual in a highly intense trading environment. It became clear that my meeting with D was not going to be the “normal” meeting between client and tax advisor. D admitted that he had not been in contact with me as he had experienced certain problems which had had a detrimental impact upon his life. Fortunately, due to medical treatment and the love of a good woman D was now recovered. D outlined to me that he had been asked to join a UK firm where he could use his skills in trading without him being exposed to the previous pressures; we discussed how he might structure his participation in the new operation. We were then joined at our meeting by D’s fiancé and it was agreed that I would work closely with her to ensure that D’s wealth was properly managed in the future; it was agreed that I would approach a number of investment advisers with whom I have contacts to request their proposals to provide D with the appropriate investment advice.
D then asked me to meet with a colleague (E) of his in his new operation who was moving from South Africa to work in London as a fellow trader. I explained to E the current HMRC practice regarding UK tax residence and the implications of the Statutory Residence Test likely to be enacted with effect from 6th April 2013. We also discussed E’s domicile and concluded that she remained non-UK domiciled not having a fixed intention of remaining in the UK long-term. I outlined the current rates of UK taxation which E would be liable to her upon earnings and explained that the 50% additional tax rate would be reducing to 45% from 6th April 2013. Despite pointing out the advantageous remittance basis of taxation of non-UK source income and gains, E was significantly unimpressed with the level of taxation in the UK which may well prompt her to reconsider her intention to work in the UK.
I then proceeded to my meeting with my next client (F) who is similarly UK tax resident but non-UK domiciled. F works for a multi-national commodity company and following a much-publicised floatation last year he became significantly wealthy based upon the value of his shareholding in his employer- company. F primarily wished to discuss the implications of wishing to continue to claim the remittance basis of taxation in respect of his non-UK source income and the need to pay the £30,000 levy to enable him to avoid UK taxation on foreign income not remitted to the UK. We also discussed F’s intention to purchase a property in the UK to live in with his family and the advisability of purchasing this in his own name due to the likely future prejudicial CGT rules that will result from purchasing the property through an offshore structure.
My final meeting of the day at 18.00 was with G, the fiancé of a client of mine. G was looking to set-up a hot yoga facility in a fashionable part of London. G was preparing a feasibility study and was looking for guidance upon the items that she ought to include. We discussed the vehicle through which G would undertake the venture and concluded that a limited company was advisable. We discussed how G would draw her income from the company by virtue of a combination of salary and dividends, the likely composition of the board of directors and the preferred classes of shareholdings. I advised G of the implications of the fitting-out costs of the studio and the availability of capital allowances upon various types of capital cost; G agreed to provide me with a copy of any specifications provided by the builders so that I could advise her upon those items of expense that would qualify for capital allowances. We also discussed the tax reliefs available on the Smart car that G intended to purchase for the business. We discussed the need to consider the implications of VAT registration and concluded that registration should be undertaken as soon as it had been decided to proceed with the venture to enhance cash flow. I advised G that she needed to ensure that she had budgeted for all the insurance cover that she would need for the business and recommended that she obtain legal advice upon the contracts that she should have with staff and teachers that she would be engaging.
It was agreed that Fuller Spurling would advise G upon matters that arise should she proceed with the venture including reviewing her business plan and suggesting suitable accounting programs; I confirmed that Fuller Spurling could also maintain payroll records if she needed this service. Whilst being somewhat daunted by the issues that were discussed I think that G felt in a more informed position to enable her to decide upon whether she wished to proceed with the venture.
I arrived back in Egham at 20.15 somewhat exhausted but inwardly satisfied by the diversity of the advice that I had been able to provide.