20150514 andy wood taxation presentation BRANDED v1

Practical tax planning ideas for entrepreneurs, SMEs and their advisers post Budget 2015 May 2015 Today’s agenda • • • • • • • Introductions The current tax planning environment (including patented ‘tax dodger’s ducking stool!’) Key pension tax changes & opportunities Profit extraction Funding / financing a business in a tax efficient manner Protecting an estate from IHT and other taxes Open forum About ESRG Taxation We are a firm of Chartered Tax Advisers (CTAs) and Trust & Estate Practitioners (TEPs) As such, we advise: • • • • • entrepreneurs; businesses; high net worth individuals; Sportspersons; and entertainers on how to structure their affairs to meet their personal and commercial objectives in the most tax efficient manner About me Andy Wood has spent his career working in the Big and latterly as a senior member of another large international accountancy firm He is a: • Chartered Tax Adviser; and • Member of STEP; He has a great deal of experience in advising Entrepreneurial clients, with a particular interest where there is an international angle to their affairs Part one The current climate Current tax planning climate • Press, politics & Court of public opinion • Election 2015 – result now in! • Could have been worse – but expect tightening of the screw on avoidance / evasion The draughtsman flourishes DoTAS & Accelerated Payments • In 2004 - DoTAS was a source of market information / early warning system • Over a decade later, an indelible mark of ‘unacceptable’ tax avoidance • Link with APNs • Pay your tax before liability established by Court • Lack of appeal (though can make ‘representations’) • Judicial review • Moral of the story- steer clear (if have not done so already)! • GAAR? The tax dodger’s ducking stool… Case: Avoidance – everybody’s at it • “Many of them [critics of tax avoidance] buy ISAs, to shield savings from taxes… They [should] refuse to tax shelter their savings • “Just as they decide to use these “loopholes” or legitimate tax breaks to increase their own savings and wealth, so companies use tax loopholes or legitimate breaks ” • The morally repugnant pension contributor and /or ISA investor? • Sink or swim? ERFB - overview • • • • Crystallise value net of 10% CGT Entrepreneurs’ Relief; Provide a tax paid drawdown facility for the next few years payable from the business profits; Participate in the proceeds of any future sale assuming the Company has increased in value; Remain as a Director of the Company so absolutely no change to the day to day activity of running the company ERFB Client Establishes bond £ outstanding ABC Trading Limited Shares sold @ MV 10% CGT charge Bond InvestCo UK ABC Trading Limited Client continues to participate in Company growth via bond CARBS - overview • Retirement benefits w/o the restrictions of UK pension schemes • Do not specifically allocate funds annually – long-term retention package • Typical clients will include: • Larger owner managed business with key directors and employees • Public companies needing to retain key staff • Large partnerships • Total conts of at least £200,000 / three employees + CARBS – overview (2) • key benefits for the Employer are: • Full tax deduction in respect of the contributions • Incentivise, reward and retain key staff in an efficient manner • Remove any issues with “disguised remuneration” rules • The key benefits for Employees are: • Does not count towards AA or LTA CARBS Employer Contribution ployer has visibility of: Employees Their ‘relevant percentage’ Life Co Holds investments in non-earmarked pool Pooled investment Life Co has visibility of: • Employees • (Unaware of who is entitled to what) Part Four Funding / financing a new or growing business Funding / Financing a new or growing business EIS / Seed EIS Pension Led Funding Obtaining pension investment – eg loan note Business Property Relief (BPR) Business Investment Relief (BIR) Part Six Protecting an estate from IHT (and other taxes) Estate and IHT ideas • Freezer trusts • QNUPS • Other business structures Freezer arrangements • • • • Give away that which has no present value PET or CLT – tax charge on nil Perhaps part disposal for CGT – nil value Examples • A and B Shares • Partnership interests (similar to hybrid structure) Another use of freezer trust – school fees Another use of freezer trust – school fees Grand parents Parents A shares B shares Trade Co shares Create trust Transfer shares Divi paid on B shares Family trust Trustees pay School fees QNUPS • • • • • Take investment return / growth out of estate (like freezer ideas) Bond wrapper – returns should be tax free Ability for the debt to be repaid if required Access as a pension in retirement Take care when calculating contributions QNUPS Overseas pension scheme Cash loan Individual QNUPS Original debt (less any amount waived) remains in estate Investment bond Growth + debt waived is outside of estate Open forum & Wrapping up ... affairs to meet their personal and commercial objectives in the most tax efficient manner About me Andy Wood has spent his career working in the Big and latterly as a senior member of another large... business in a tax efficient manner Protecting an estate from IHT and other taxes Open forum About ESRG Taxation We are a firm of Chartered Tax Advisers (CTAs) and Trust & Estate Practitioners (TEPs)... APNs • Pay your tax before liability established by Court • Lack of appeal (though can make ‘representations’) • Judicial review • Moral of the story- steer clear (if have not done so already)!