One minute with Nigel Beadsworth, a partner and head of legal practice at Stonehage Fleming Law Ltd.
What’s keeping you busy at work?
The pandemic crisis has galvanised many of our clients to look more closely at their estate planning arrangements, so we are working with them to make sure their wills, power of attorney and letters of wishes are all up to date. Ensuring that assets can be managed in the period after death is of particular concern, particularly as the process of getting probate (or foreign equivalent) has slowed to a crawl since the start of the pandemic.
The Stonehage Fleming Group has recently announced its acquisition of Maitland Private Client Services, including Maitland Advisory LLP, so there is also plenty of work to be done integrating the two businesses.
If you could make one change to tax, what would it be?
I’d abolish inheritance tax and instead charge capital gains tax on death. Many of our clients who have earned their wealth feel that having paid tax once when making their money, a second charge to tax on that same money on death is unfair. Paying tax on an accrued profit is less contentious.
In January 2020, the All Party Parliamentary Group (APPG) on Inheritance Tax and Intergenerational Fairness reported that inheritance tax ‘is often criticised as complex, ineffective, riddled with anomalies, distortionary and unfair. It is unpopular and ripe for reform’. Even though inheritance tax only raises less than 1% of the total government’s tax take, it encourages wealth to be concentrated rather than spread through wider society and the economy during people’s lifetimes. The APPG proposed a reform of inheritance tax, but in the interests of tax simplification, why not just do away with it altogether?
What advice would you give to someone new to the tax profession?
Practicing in tax law involves a lifetime of learning; just when you think you have grasped one aspect of the rules, they might change. Unlike other areas of law which tend to remain fairly constant, the ongoing tension between taxpayer and government over the tax take leads to an annual cycle of amendments and new provisions. This, coupled with all the grey areas, means you’ll spend a lot of time with your head buried in the Yellow Book.
Are there any new rules that are causing a particular problem?
The ever increasing obligations for trustees to provide information around the world are creating a heavy compliance burden. In the UK, changes to the trust registration service brought in to implement 5MLD set very tight deadlines for notifying HMRC of certain changes. In particular, it is challenging for non-UK trustees, with beneficiaries and assets in many countries, to have systems in place to provide HMRC with information within the 30 day deadline and also to keep on top of requirements put in place by other countries.
Has a recent case caught your eye?
The recent case of Sofer v Swissindependent Trustees SA [2020] EWCA Civ 699 is a breach of trust case that has not got beyond a preliminary hearing, but it is worth following because of the potential tax implications. In a nutshell, a trust deed did not allow the trustee to make distributions to the settlor, so it instead loaned money to him on terms that were interest free, on demand and unsecured. On the settlor’s death, his estate was unable to repay the debt. The claimant alleged that the payments were gifts rather than loans. If this is held to be the case, it could have UK tax implications for trustees who make similar loans to UK resident beneficiaries, and trustees will need to put more robust procedures in place when they make loans to UK resident beneficiaries.
What issues have clients been raising?
A big question is how different governments will respond in the aftermath of covid. Some may impose higher taxes on wealthy residents, who in turn might look to relocate. We are already seeing interest from wealthy clients potentially looking to take up residence in the UK and other more favourable tax jurisdictions.
One minute with Nigel Beadsworth, a partner and head of legal practice at Stonehage Fleming Law Ltd.
What’s keeping you busy at work?
The pandemic crisis has galvanised many of our clients to look more closely at their estate planning arrangements, so we are working with them to make sure their wills, power of attorney and letters of wishes are all up to date. Ensuring that assets can be managed in the period after death is of particular concern, particularly as the process of getting probate (or foreign equivalent) has slowed to a crawl since the start of the pandemic.
The Stonehage Fleming Group has recently announced its acquisition of Maitland Private Client Services, including Maitland Advisory LLP, so there is also plenty of work to be done integrating the two businesses.
If you could make one change to tax, what would it be?
I’d abolish inheritance tax and instead charge capital gains tax on death. Many of our clients who have earned their wealth feel that having paid tax once when making their money, a second charge to tax on that same money on death is unfair. Paying tax on an accrued profit is less contentious.
In January 2020, the All Party Parliamentary Group (APPG) on Inheritance Tax and Intergenerational Fairness reported that inheritance tax ‘is often criticised as complex, ineffective, riddled with anomalies, distortionary and unfair. It is unpopular and ripe for reform’. Even though inheritance tax only raises less than 1% of the total government’s tax take, it encourages wealth to be concentrated rather than spread through wider society and the economy during people’s lifetimes. The APPG proposed a reform of inheritance tax, but in the interests of tax simplification, why not just do away with it altogether?
What advice would you give to someone new to the tax profession?
Practicing in tax law involves a lifetime of learning; just when you think you have grasped one aspect of the rules, they might change. Unlike other areas of law which tend to remain fairly constant, the ongoing tension between taxpayer and government over the tax take leads to an annual cycle of amendments and new provisions. This, coupled with all the grey areas, means you’ll spend a lot of time with your head buried in the Yellow Book.
Are there any new rules that are causing a particular problem?
The ever increasing obligations for trustees to provide information around the world are creating a heavy compliance burden. In the UK, changes to the trust registration service brought in to implement 5MLD set very tight deadlines for notifying HMRC of certain changes. In particular, it is challenging for non-UK trustees, with beneficiaries and assets in many countries, to have systems in place to provide HMRC with information within the 30 day deadline and also to keep on top of requirements put in place by other countries.
Has a recent case caught your eye?
The recent case of Sofer v Swissindependent Trustees SA [2020] EWCA Civ 699 is a breach of trust case that has not got beyond a preliminary hearing, but it is worth following because of the potential tax implications. In a nutshell, a trust deed did not allow the trustee to make distributions to the settlor, so it instead loaned money to him on terms that were interest free, on demand and unsecured. On the settlor’s death, his estate was unable to repay the debt. The claimant alleged that the payments were gifts rather than loans. If this is held to be the case, it could have UK tax implications for trustees who make similar loans to UK resident beneficiaries, and trustees will need to put more robust procedures in place when they make loans to UK resident beneficiaries.
What issues have clients been raising?
A big question is how different governments will respond in the aftermath of covid. Some may impose higher taxes on wealthy residents, who in turn might look to relocate. We are already seeing interest from wealthy clients potentially looking to take up residence in the UK and other more favourable tax jurisdictions.
