Tim Mallon from Leathers LLP reflects on the wide variety of problems referred to the firm by clients and the ingenious ways in which these are solved.
Last month we held our charity fund-raising dinner in aid of the William Wates Memorial Trust
and you should be able to see photographs from this elsewhere in this magazine.
Of course, we earn our collective living by providing accounting and tax advice to clients and in my short period with the business I have been extremely impressed by the range of detailed advice that we provide. That advice often deals with highly complex areas of company and tax law but we seek to explain potential outcomes for our clients and our recommendations for action in a clear, straightforward manner.
We have an extremely varied client base both in terms of the sectors and the geographies in which they operate. To give you a flavour of the work that we have been doing, I have picked out three examples showing the complexity and varied nature of our work.
We have been recently engaged by a group of companies to finalise their accounting and taxation affairs prior to the holding company being wound up and capital distributions being paid to the shareholders. That sounds simple enough doesn’t it? It becomes a little more complex when two of the subsidiary companies in the group are not-resident in the UK and when one of the intermediate holding companies was incorporated under the law of an overseas jurisdiction but is resident here for tax purposes. We have liaised with professionals across the world to understand the accounting and tax filing requirements and then assisted our clients in bringing together the necessary information to satisfy these. Throughout this exercise we have had to be mindful of the eventual outcome for the shareholders and the impact of this upon their tax profiles.
Much of our consultancy work is driven by bespoke tax planning for our clients. As a result of recent investment decisions we advised a client that he really need to reconsider his exposure to Inheritance Tax and the provisions of his Will. There is nothing unusual in that for us, but on this occasion, we knew that it would not only involve consideration of our client’s domicile but also the estate taxes position in both Germany and Portugal given this client’s particular circumstances.
Unlike income taxes which have a reasonable consistent basis of taxation in that it seeks to tax income, governments tax capital and wealth in many different ways. Some tax on the basis of capital value on death, others on the basis of annual lifetime wealth to name only two. This means that when dealing with cross-border capital tax planning, the type of planning that might be highly effective in the UK can be much less so abroad. We appear to have negotiated a plan to mitigate our client’s global wealth tax exposure but it has been challenging! Three-dimensional chess is probably easier!
Finally, we were delighted to hear recently that a client of ours had, with our assistance, managed to dispose of his investment in a company located in Latvia. Our client had invested in a company based in another European jurisdiction which itself held shares in companies located in a number of different European companies. We had developed a plan for a client to enable him with withdraw in stages from the group but retain his entitlement to Entrepreneurs’ Relief. This required us to understand the mechanism of a company reorganisation under the law of several European countries and then relate this back to UK tax law. At the last moment a change in Latvia company law changed the transactions entirely but we managed to satisfy ourselves that our client should be unaffected by this!
Obviously not all of our clients have affairs which are as complex as this and we look after our clients’ affairs with the same level of diligence no matter how complicated those affairs may be but these stories illustrate not only the broad nature of our advice but also the trust that our clients place in us to help them. We seek to gain a deep understanding of our clients’ financial affairs and their wishes and then bring our expertise, experience and innovative thinking to bear upon them. This approach has proved to be successful in both retaining clients and winning new opportunities and we look to do even more of both in the future!
