Recognise excellence, cast your vote

pswpAs many of you are aware, the 10th annual STEP Private Client Awards will soon be upon us. As Chair of the Presiding Judges I help review entries from around the world and coordinate the difficult task of helping choose the winners. There is, however, one category that is decided solely by STEP members. The Trusted Advisor of the Year category recognises an outstanding individual practitioner in any discipline serving private clients or an advisor who stands out as an expert in the field. The nominees for Trusted Advisor of the Year are:

jawp Julia Abrey TEP, Withers

Julia is Partner and head of the Withers’ multi-jurisdictional elder law team in London. She is a specialist in international elder law and capacity issues and is highly rated in Legal 500 2014 and Chambers 2015. Julia also chairs STEP’s Mental Capacity Special Interest Group.

bawp William Ahern TEP, Family Capital Conservation 

William (or Bill as he is more commonly known) is based in Hong Kong having been admitted as a solicitor in Australia, Hong Kong and England and Wales. He is the Principal of Family Capital Conservation, which assists intermediaries and wealthy families in the areas of complex succession, cross-border tax and family legacy. Bill is a former Chair of STEP Hong Kong and a member of the STEP Worldwide Council.

jbwp Jonathan Burt TEP, Harcus Sinclair

Jonathan is a partner with the law firm Harcus Sinclair. Previously, he was a partner with Baker & McKenzie and a managing director of Barclays Wealth. He specialises in advising clients on complex international matters typically involving cross-border tax and trusts, multi-jurisdictional succession planning and conflict of law issues.

walidwp Walid S. Chiniara TEP, Deloitte Middle East

Walid is a Partner at Deloitte Middle East, and leads Deloitte Private across the GCC and MENA region. He is a leading family business advisor, a corporate finance lawyer, and an accredited mediator specialised in managing intergenerational conflicts, with 35 years’ experience working across five continents.

mgwp Martyn Gowar TEP, McDermott Will & Emery

Martyn is senior counsel at McDermott Will & Emery UK LLP and an Executive Committee Member of the Society for Advanced Legal Studies; Chairman of the Succession Sub-Committee of the Chartered Institute of Taxation; Vice President (Europe) of the International Academy of Estate & Trust Law; Chairman of the Estates Business Group; and a member of the STEP Journal Editorial Board.

qcwp Christopher McCall QC TEP, Maitland Chambers

Christopher specialises in trusts, tax and charity matters at Maitland Chambers.  Over a long and distinguished career, he has acted extensively for and against HMRC and for the Attorney‑General in charity matters. He has fought numerous complex appeals in the Privy Council, House of Lords and Court of Appeal. Legal directories consistently rate him in the front rank for private client work.

The PCAs are an occasion to recognise and celebrate outstanding work in the field by our fellow practitioners. Voting is open to STEP members until 31 July 2015. I hope all of you will take the time to vote and show the high regard in which you hold your peers.PCA logo 2015

Paul Stibbard TEP is Executive Vice Chairman with Rothschild Trust in London. He sits on STEP’s International Committee, Business Families Special Interest Group Steering Committee and has been Chair of the Presiding Judges for the STEP Private Client Awards three times.

The road to compliance

Sean SmithJan Wright, of STEP’s UK Practice Committee, and I attended the HM Revenue & Customs Annual Stakeholder Conference today. We heard from Financial Secretary to the Treasury, David Gauke MP, that through policy changes and an investment of £800 million, the government was  striving hard to find ways to incentivise tax compliance and make the tax system as a whole easier to operate and understand.

HMRC is focused on tackling tax evasion and tax avoidance, as well as aggressive tax planning. They want digital businesses that deliver products and services into a market – without having physically set up in that location – to be taxed appropriately.HMRC Building

HMRC also issued four consultation documents today on new measures against offshore tax evasion, with further consultations and calls for evidence likely, coming out of the UK Budget last week.

Sean Smith, STEP Policy Manager

STEP England & Wales Biannual Statement – July 2015

aewpAnother six months have flown by during which time plenty has happened on the international and national stage including the election of the Conservative Party into government.

The first Tory Budget since 1996, announced on 8 July, was widely trailed in many respects. The UK Technical Committee has already been preparing for changes to the non-domicile rules and will no doubt be busy responding to these proposals and the various Consultations.

In February we had a very successful Branch Chairs’ Assembly at which STEP CEO David Harvey gave an overview of the major issues faced by STEP. He noted that there was much to be optimistic about although there are a number of challenges facing STEP and its members over the next few years. We are no doubt all aware of this in terms of regulatory requirements, which continue to increase.
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Another challenge is ensuring that we remain relevant to our members in terms of the resources, training, networking and brand. We are conscious that different branches have different pressures for a variety of reasons and want to ensure that we provide as much assistance as we can to help them thrive. STEP’s Worldwide Chair Ed Buckland attended the Branch Chairs’ Assembly and advised that the key question to ask was ‘what can STEP do for me?’.   Please do therefore feed back to me or staff at STEP on ideas you may have for supporting and strengthening your branch or STEP generally.

The first months of STEP’s new brand was raised at the Branch Chairs Assembly following its launch earlier this year.  The new brand clearly sets out the over-arching nature of members’ work in the new strapline ‘Advising Families Across Generations’. This has been well received and the strapline reflects a core aim of members.

We were also delighted to have Professor Elizabeth Cooke to talk about the upcoming Law Commission Wills Review.  This led to lively discussion on issues such as mutual wills, joint wills, the test for capacity, rectification and formalities for making a will.  It was therefore disappointing  later to learn that the Government has asked the Commission to put this project on the backburner while they review the law relating to the solemnisation of marriage. Hopefully we will see this issue back at the forefront sometime in the near future.

Yet again the Spring Tax, Trusts and Estates Conferences have been very well attended and well received and we are extremely grateful to all our speakers for giving of their time and expertise.  It is clear that one of the particular benefits that members most appreciate is the technical expertise that STEP provides in one form or another, including conferences, webinars, technical notes and courses. I am extremely grateful to everyone who is involved with these areas and with the representations made to government and international organisations. We have excellent Technical, Practice and Public Policy Committees, the members of which work very hard to support us all.

You will also be aware that there have been various changes to the education framework designed to give greater clarity, which have been well received. More recently Director of Professional Development Nigel Race and his team have been implementing the pilot of the new Employer Training Scheme (ETS).  A number of organisations have already signed up to
take part in the ETS and more potential partner organisations have been identified. It has been encouraging to see a number of accountancy firms engaged with this as well as lawyers and financial services.  Our thanks go to Nigel and his team for their hard work in this and seeking to engage with new members who will become part of the lifeblood of STEP.

We will shortly have the tenth annual STEP Private Client Awards, which
is a great occasion and enables us to celebrate the excellence of our peers around the world. This year again there are a number of practitioners from England and Wales vying to take home a coveted PCA. I wish them all the very best of luck.

On 9 December there is to be a Leaders’ Forum in London looking at the future member offer in a time of disruptive change. This will mean a strong emphasis on professional development and on the courses and related services that STEP should produce to support member careers over the coming years. STEP can only thrive and survive if the Society stays ahead of change to remain highly relevant to members and their careers and clients. This imperative is central to the STEP 2021 Business Plan. The Leaders’ Forum will help us achieve clarity about some of the bricks and building blocks of the professional development and related service offers for the next few years.

I would like to thank all of those at the STEP Office who not only support the England and Wales Regional Committee directly but who work hard in making sure that STEP remains relevant to its members and keeps up-to-date in an ever-changing world.

Elections for STEP Council and the England and Wales Regional committee open shortly so do consider getting involved. None of us have a monopoly on ideas, enthusiasm or youth!

Before I wish the summer away I trust you all get some form of break that will refresh and reenergise you.

Alex Elphinston TEP is Chair of STEP’s England and Wales Regional Committee

The post-election UK Budget was radical — but only with a small r

Wendy WaltonWith five years before the next UK General Election, many predicted the Chancellor would make radical tax changes, but the announcements fell short of hitting that mark.

In his March 2015 Budget, George Osborne stated that he intended to review non-UK domicile status and whether it should be harder to obtain. Changes were expected to the period for which a remittance basis election must be made, but instead the Chancellor has chosen a more direct method of chipping away at the tax advantages of non-UK domicile status. Non-dom status survives but, from April 2017, anybody resident in the UK for more than 15 of the past 20 tax years will be deemed UK domiciled for all tax purposes ‒ there are no grandfathering rules. This will mean that they will no longer be able to use the remittance basis from their 16th year of UK residence and they will also be deemed domiciled for inheritance tax (IHT) purposes. A child’s domicile under general law and deemed domicile for tax purposes will be tested by reference to each child’s own individual circumstances. In future, those who had a domicile in the UK at birth will revert to it whenever they are resident in the UK.

Once a non-UK domiciled individual has acquired deemed domiciled status under the 15-year rule they will need to spend over five tax years outside the UK to lose it. UK domiciliaries who leave the UK after 5 April 2017 having been here for over 15 years will also be subject to the five-year rule even if they intend to emigrate permanently.

Non-UK domiciliaries who set up an excluded property trust before becoming a deemed UK domicile under the 15-year rule will not be taxed on income and gains retained in the trust. However, such long-term residents will, from April 2017, be taxed on any benefits, capital or income received from such trusts on a worldwide basis. Excluded property trusts will now fall within the UK IHT net if they own UK residential property (occupied or let) through an offshore company, partnership or other opaque vehicle.UK Budget Red Briefcase111

The Chancellor also chipped away at the tax breaks for private equity fund managers: carried interest will still be taxed under capital gains tax rules but tax deductions will be significantly restricted in many cases. Similarly, the restriction of mortgage interest relief for buy-to-let investors will make letting less tax-efficient when fully implemented by 2020/21.

The long promised IHT break on family homes duly emerged but will only apply where the home is passed on to a direct descendent and tapered away for estates with a net value of more than GBP2 million (before reliefs and exemptions). The additional relief starts at GBP100,000 for deaths in 2017/18 and only reaches GBP175,000 by 2020/21: the freeze on the main nil band will be maintained. The cut in pension tax relief for high earners that will pay for this is also to be phased in with the transitional rules softening the blow by giving everyone two GBP40,000 annual allowances to use in 2015/16.

Last week’s Budget also confirmed to estate planners that multiple trusts will remain effective for IHT provided they are set up and funded on different days. Individuals who settle multiple trusts will no longer have an unlimited number of IHT nil-rate bands but it will be possible to settle property up to the value of the nil-rate band into trust every seven years.

Perhaps the most radical change was the decoupling of the personal tax regime for dividends from corporation tax. Without the notional credit, the new rates could collect up to 6 per cent more on dividends and, although the GBP5,000 nil band will limit the effective tax increase for many, there will still be an element of double taxation. Those looking to forestall the change by paying out larger dividends this year will save some tax, but will also bring forward any higher rate tax liabilities to boost tax revenues in January 2017.

So, while there were some surprises, their impact was tempered with transitional rules and long lead times: the overall impression was more evolution than revolution.

Wendy Walton TEP is the Chair of the STEP UK Technical Committee and is a Partner and National Head of Private Client Services at BDO LLP. Read her March analysis of the Chancellor’s earlier 2015 Budget.

STEP LatAm News Digest wrap-up – June’s top stories

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Want to know why FIFA and FATCA were big news items in the Latin American private wealth sector last month? Welcome to the wrap-up of the top five most popular stories in the STEP LatAm News Digest throughout June 2015. In case you missed them, here are the worldwide industry news stories most viewed by our readers.

Effect of signing up to US FATCA: Law firm Posse Herrera Ruiz explains the effect of Colombia’s accession to the US’ Foreign Account Tax Compliance Act (FATCA). Starting in June, the two countries will automatically exchange tax information on a monthly basis: the US Internal Revenue Service (IRS) will share tax information about Colombian residents who have bank accounts in the US (including names, tax ID numbers and income or dividends paid into their accounts) to Colombia’s tax authority (Sp: Dirección de Impuestos y Aduanas Nacionales) and Colombian financial institutions will share the same information with the US when the accountholders are US taxpayers.

Latin American countries investigate FIFA officials: Brazil, Costa Rica and Argentina have opened domestic investigations into possible tax evasion, money laundering and bribery allegedly committed by current and former officials of football associations. Costa Rica and Argentina are actively supporting a US investigation into the matter.

Colombia and US sign FATCA IGA: Colombia has signed a Foreign Account Tax Compliance Act (FATCA) intergovernmental agreement (IGA) with the US. The agreement is intended to combat offshore tax evasion by establishing the exchange of information between the two countries. It will also enable information about US taxpayers in Colombia to be referred by financial institutions to the country’s tax authority (Sp: Dirección de Impuestos y Aduanas Nacionales de Colombia, DIAN).

There’s gold offshore: Mark Bridges TEP considers the future of offshore tax planning.

Foreign tax exemptions disallowed: Panama’s Varela government enacted Law 27 in May 2015, introducing important fiscal reforms. Non-residents’ income from Panamanian public bodies, non-taxpayers and loss-making companies are now subject to withholding tax, and there is no exemption from Panamanian withholding tax if the ultimate recipient of the income can claim tax credits in their country of residence.

The STEP Industry News Digests provide a round-up of relevant industry news for trust and estate practitioners and other professionals in the wealth management sector. They provide brief summaries of topical news stories gathered from news providers internationally, providing a quick reference for busy practitioners to all the relevant news and issues. STEP’s news digest services include twice weekly UK and International editions as well as a bi-weekly North America Digest (focusing on the US, Canada and Mexico), and a Latin America Digest.

To subscribe to STEP’s digest services you will need to first register here: http://www.step.org/register

Follow @STEPLatAm for regular industry news across the region.

STEP North America News Digest wrap-up – June’s top stories

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June was a big month in the North American private wealth sector with the US Supreme Court ruling in favour of same-sex marriage and new tax rules due to come in for Canadian trusts. Welcome to the wrap-up of the top five most popular stories in the STEP North America News Digest throughout June 2015. In case you missed them, here are the top five US industry news stories most viewed by our readers.

Experts advise to revise estate plans due to Canada’s new tax rules for all trusts: Canadian estate planning experts, many of them present at STEP Canada’s 17th National Conference in Toronto last week, advise that estate plans should be revised to avoid unintended tax consequences (and to make the most of planning opportunities) that may result from Bill C-43 (Economic Action Plan 2014 Act, No2). Under the Bill, from January 1, 2016 all trusts in Canada will be subject to the highest marginal tax rates with the exception of: trusts that qualify as graduated rate estates; and qualified disability trusts – both of which must meet certain criteria to benefit from graduated rates of taxation.

BC Supreme Court awards CAD350,000 to siblings bequeathed preference shares in secret will:The Supreme Court of British Columbia has awarded three siblings CAD350,000 each for their work on the family farm after their parents’ secret will endowed them with preference shares which “have restrictions on their redemption and, upon redemption, will attract tax consequences”. (McDonald v McDonald, 2015 BCSC 951).

Tread carefully: Vimala Snow TEP, David Stein and Sabrina Lai offer tips for navigating non-US structures through the US income tax minefield.

Robin Williams’ family given additional time to settle estate dispute: A judge has given Robin Williams’ children and wife an additional two months to settle their dispute about the distribution of the late actor’s estate. In March 2015 a court granted them eight weeks to decide how to divide Williams’ estate but the parties are still disputing the distribution of personal items and the amount of money required to maintain one of his homes – they now have until the end of July to reach a settlement.

Impact of upcoming EU Succession Regulation on Canadian: Margaret O’Sullivan TEP discusses the likely impact of the European Union Succession Regulation, which will come into force in all EU Member States (except Denmark, the UK and Ireland) from August 17, 2015 for all persons dying on or after that date with or without a will. The EU Succession Regulation provides rules to determine which country’s laws will apply to the entire estate and, importantly, a person can dictate in their will to apply the law of their nationality/ies, as opposed to their place of habitual residence, which is how jurisdiction is usually determined.

The STEP Industry News Digests provide a round-up of relevant industry news for trust and estate practitioners and other professionals in the wealth management sector. They provide brief summaries of topical news stories gathered from news providers internationally, providing a quick reference for busy practitioners to all the relevant news and issues. STEP’s news digest services include twice weekly UK and International editions as well as a bi-weekly North America Digest (focusing on the US, Canada and Mexico), and a Latin America Digest.

To subscribe to STEP’s digest services you will need to first register here: http://www.step.org/register

STEP International News Digest wrap-up – Junes’ top stories

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Too busy enjoying the sunshine to keep up with the latest developments in the private wealth field? Welcome to the wrap-up of the top ten most popular stories in the STEP International News Digest throughout June 2015. In case you missed them, here are the worldwide industry news stories most viewed by our readers.

Responses to new Commission ‘blacklist’: The Commission of the European Union released yesterday a list of 30 ‘non-cooperative’ jurisdictions which it claims do not meet its standards of transparency, exchange of information, and fair tax competition. A number of financial centres have issued responses criticising the list.

Four more banks sign US non-prosecution deals: Four more Swiss private banks have reached non-prosecution agreements with the US Department of Justice (DoJ) under the terms of the DoJ’s Swiss Bank Program regarding allegations that they helped their American clients evade tax.

Summary of the past three years’ property tax reforms: Law firm Farrer & Co has produced a briefing summarising the new UK property tax regime, which has become more complicated in the last three years, especially for non-residents.

Presidential candidate to sue government over foreign bank account reporting rules: Senator Rand Paul is to sue the Internal Revenue Service in pursuance of a court declaration that the US’ Foreign Bank Account Reporting (FBAR) regime and the Foreign Account Tax Compliance Act (FATCA) are unconstitutional. Paul is acting jointly with US expatriates who say they cannot obtain normal banking services abroad because of the US authorities’ campaign against offshore tax evasion.

Billionaire emigrant forced to pay exit tax: The South African Finance Ministry has succeeded in charging emigrant businessman Mark Shuttleworth ZAR250 million (EUR18 million) for moving funds out of the country in 2009. The country’s Supreme Court found in Shuttleworth’s favour last October, but has now been overruled following the government’s appeal to the Constitutional Court.

BVI gives non-doms four more months to opt out of automatic reporting: The British Virgin Islands (BVI) has allowed UK non-doms an additional four months to notify their intention to elect for the UK’s Alternative Reporting Regime (ARR).

Bank forms for identifying clients’ residency status: The British Bankers’ Association has issued template forms to be used by UK banks to collect information about their clients’ tax residency and citizenship status, so that it can be passed to foreign tax authorities under the OECD’s Common Reporting Standard.

The curious incident of the EU ‘blacklist’: STEP’s Deputy Chief Executive George Hodgson looks at the EU Commission’s publication of a so-called blacklist of 30 non-cooperative jurisdictions in his latest post on the STEP Blog, describing the move as “hardly the best example of evidence-based policy making from the EU.” The list targets jurisdictions which have not met EU standards of transparency, exchange of information and fair tax competition.

Trust law amended to override foreign court orders: Amendments to the Isle of Man’s trust law are expected to take effect on 16 June. The Trusts (Amendment) Act 2015 provides additional powers for Manx law to override judgments or orders of foreign courts – in particular those of England and Wales – and further protections for trustees and beneficiaries against the consequences of a foreign jurisdiction’s refusal to recognise the concept of trusts. The rule against perpetuities and the two-trustees rule are being abolished.

Two face money laundering charges: Two Sark residents, Michael Doyle and Belinda Lanyon, have gone on trial in Guernsey reportedly facing charges which include money laundering and using the proceeds of crime. Both deny all charges.

The STEP Industry News Digests provide a round-up of relevant industry news for trust and estate practitioners and other professionals in the wealth management sector. They provide brief summaries of topical news stories gathered from news providers internationally, providing a quick reference for busy practitioners to all the relevant news and issues. The News Digests also feature job listings from our recruitment site and list local STEP branch events and conferences. STEP’s digest services include twice weekly UK and Wealth Structuring (international) editions as well as a bi-weekly North America Digest focusing on the US, Canada and Mexico, and a Latin America Digest.

To subscribe to STEP’s digest services you will need to first register here: http://www.step.org/register

STEP UK News Digest wrap-up – June’s top stories

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Sick of getting key industry news on the grapevine? Welcome to the wrap-up of the top ten most popular stories in STEP’s online UK Digests throughout June 2015 as clicked by our readers.

Conservative Party confirms election campaign promises: Treasury Minister David Gauke MP has confirmed to parliament that the new Conservative government will introduce a transferable main residence allowance of GBP175,000 per individual, in addition to the existing nil-rate band. This will ‘take the family home out of inheritance tax for all but the richest’, he claims. The government will also conduct a review of how deeds of variation are used for tax purposes, with a report due in the autumn.

HMRC explains why Form R27 was scrapped: The June 2015 edition of HM Revenue & Customs’ trusts and estates newsletter explains why the process for dealing with the deceased’s income tax position was changed last October. It says the old Form R27 was burdensome in several respects, not least because it asked for information which the personal representative might not have been able to obtain and the error rate in completing the form was extremely high.

Charities defeat nephew’s claim of deathbed gift: A group of animal charities have asserted their right to a share of June Fairbrother’s GBP350,000 home, which she left to them in her will. The England and Wales Court of Appeal overturned a previous ruling that the deceased had given the house to her nephew Kenneth King four months before her death, under the doctrine of donatio mortis causa.

Who will have to pay the new Scottish income tax?: HM Revenue & Customs has published technical guidance on Scottish taxpayer status, which under the Scotland Act 2012 will determine who will pay the new Scottish rate of income tax starting in April 2016.

Anomalous tax position where death is caused by house fire: Experts discuss cases where the deceased died in a house fire, which appear to attract a double tax charge under HM Revenue & Customs’ interpretation of s171 of the Inheritance Act 1984. This states that a change in value by reason of death is treated as arising before death.

STEP issues sample investment policy statement for UK trustees: The UK Practice Committee has provided a sample investment policy statement (IPS) and accompanying guidance to assist practitioners in complying with the requirements under the Trustee Act 2000 (applicable in England and Wales) and other legislation, such as the Trustee Act (Northern Ireland) 2001, where similar obligations are required.

The sample statement has been drafted with the trustees of private family trusts in mind, although trustees of charities should also consider the requirement for an IPS. It is good practice to have a written statement in place from the outset of any delegation of investment powers to professional qualified advisors.

Expression of wishes may be preferable to trusts: Some pension fund administrators are advising their members to complete ‘expression of wishes’ forms to nominate the beneficiaries of their pension fund when they die, rather than passing it on via a will or trust. The introduction of new pension flexibility rules last month means that many more pension pots will be passed on to heirs.

Summary of the past three years’ reforms: Law firm Farrer & Co has produced a briefing summarising the new UK property tax regime, which has become more complicated in the last three years, especially for non-residents.

Significant reform of succession law: The Scottish Government is to amend several key areas of succession law, following last year’s consultation. Among other things, it will introduce legislation declaring any testamentary provision in favour of a former spouse to be revoked on divorce, give executors a good faith defence against litigation for distribution errors, and abolish donations mortis causa.

Actor loses tax relief claim as rented London flat was not ‘exclusively’ for work: The actor Tim Healy has lost his claim for tax relief for renting a flat while working away from home. The First-tier Tax Tribunal ruled that the expense was not wholly and exclusively incurred for the purpose of his business because Healy had admitted he wanted a spare room for guests.

The STEP Industry News Digests provide a round-up of relevant industry news for trust and estate practitioners and other professionals in the wealth management sector. They provide brief summaries of topical news stories gathered from news providers internationally, providing a quick reference for busy practitioners to all the relevant news and issues. The News Digests also feature job listings from our recruitment site and list local STEP branch events and conferences. STEP’s digest services include twice weekly UK and Wealth Structuring (international) editions as well as a bi-weekly North America Digest focusing on the US, Canada and Mexico, and a Latin America Digest.

To subscribe to STEP’s digest services you will need to first register here: http://www.step.org/register