It’s about saving your clients tax, isn’t it?

A conversation with the MD of an engineering company last week confirmed something which the author of Tax Tuesday has long known to be true. Until a client has received good tax advice and planning, they typically don’t really know what we do.

“Saving tax” is a description which is incomplete, misleading and can even sometimes be contrary to progress…………………….

Tax Tuesday picks just six assignments we have on hand at this moment in time. These might help to illustrate what we do and why the description above is not nearly adequate.

1. Share option arrangements

It is normal for us to have at least one exercise in progress involving the design of a stakeholding for a key employee (or more).

One of several such projects on the go right now is a share option scheme for 20 employees of a progressive professional services company in Lancashire. Through this work we will consolidate employer/employee loyalty and establish greater “goal congruence” between the owners and staff.

While our solution includes a range of valuable tax benefits, this work has fundamentally commercial objectives. Just like the vast majority of the things we do.

2. Demerger of business

There are occasions when it is highly desirable that businesses sitting within one ownership structure are “demerged” into more than one piece.

We are currently designing the partition of a property group into several different pieces. This will enable the respective owners to exercise their own initiatives, to pursue different priorities, and ultimately, to realise their interests at different times.

Our solution to this fundamental change in structure is necessarily tax-focused. It must overcome challenging tax obstacles (including a particular focus on Stamp Duty Land Tax on top of the usuals).

However, while the tax management is critical, the work is commercial in nature.

3. Divorce advice

As with so many aspects of life, taxation issues arise where they are often unexpected (and unwelcome). Divorce is a case in point. It’s hard enough, without additional pressures like tax costs throwing petrol on to an already fiery situation.

We are currently helping one of our clients to make the break with their spouse as affordable as possible (for both parties), through planning, cooperation and the avoidance of expensive tax outcomes.

Yes, our work here is about “saving tax”, but it is so much more than that in practice.

4. Incorporation of a Partnership

One of our partnership clients runs a care home which, for historical reasons, is subject to a mortgage secured on the home. The debt is a cashflow burden. Even more so given the lending community’s disfavour with this sector.

With design creativity and cooperation from various parties we will be moving this business into a limited company structure. That will make the loan serviceable at a materially lower net cost, and ease the business’ liquidity demands tremendously. All stakeholders will benefit – the business, the owners, the residents and the mortgage lender.

This is tax structuring, using tax facilities and techniques, and achieving some significant taxation advantage in the process. But the work is principally about achieving commercial progress and that is the major prize.

5. New business venture and IR35

A senior professional within a major organisation is planning his exit from that employment. He will undertake a range of related activities through his own new practice, including the likely supply of expertise back to his former employer.

Helping this gentleman to organise his prospective commercial relationships is a critical exercise. Tax risks, in the form of “IR35” inter alia, need to be resolved within the terms of business and the formal paperwork to be drawn up.

It is routine for our tax advisory service to facilitate start-up activity like this. We will protect our client against tax exposures and give the new venture a chance of success.

Commercial in nature? 100%.

6. Estate planning

Individuals who have worked hard, taken risk, and been prudent for their (and their dependants’) long-term benefit, are understandably concerned about the spectre of a 40% Inheritance Tax charge being applied to their accumulated wealth. That wealth has already suffered Income Tax and Capital Gains Tax throughout their lifetime.

We are currently designing an estate plan for one couple who wish to achieve the following objectives to:

  1. secure the financial futures for their children and remoter descendants;
  2. maintain a high degree of control over the assets involved;
  3. ensure that this is all protected from matrimonial risk; and
  4. minimise the unnecessary exposure to Inheritance Tax.

Our planning and our understanding of our clients’ needs enable us to achieve all of these objectives. Tax wastage will be minimised but, more importantly, we will remove unnecessary anxiety over all these aspects from our clients’ lives.

Overall

So, is the Harold Sharp Tax Advisory Service about “saving tax for our clients”? Well, yes it is, but it is nearly always much more than that.

If you would like to talk over anything in your commercial, financial, and domestic life where you wonder whether we might be able to offer you valuable advice and guidance, please do not hesitate to call us, or send an email, and just ask.

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