STEP’s Special Interest Groups under the spotlight

SIG Spotlight Sessions 2017The end of November saw STEP Special Interest Groups’ (SIGs’) annual day of conferences, the ‘Spotlight Sessions’, held at the Montcalm Hotel in London and attracting over 300 international delegates.

The day started early with a breakfast-time Philanthropy Advisors SIG session. Outgoing chair Suzanne Reisman TEP welcomed attendees and contributed to a panel discussion, which also included Keyvan Ghavami of Act On Your Future, Jacqueline Lazare TEP of Royds Withy King and Julie Wynne TEP of Froriep. A lively discussion ensued, the takeaway point being that advisors are missing a business opportunity if they do not at least raise the issue of charitable giving with their clients.

The International Client SIG session began with Joseph Field TEP of Withers Bergman LLP delivering the keynote lecture on the changing landscape for international clients, quipping that events move so fast, that if you miss the news for 15 minutes, you can get completely behind. Tony Pitcher TEP of LGL Trustees Limited moderated a discussion on tax regimes, which included contributions from Luxembourg, Cyprus, the US, the UAE, Italy and Switzerland.

Bill Ahern TEP of Ahern Lawyers, David Russell QC TEP of Outer Temple Chambers and Wendy Martin of EY – Channel Islands discussed ‘attacks on intermediaries’ and practical issues in relation to the Common Reporting Standard (CRS). Wendy said that implementing CRS was a massive challenge, and depended hugely on how you interpret the law. She asked what might happen to all the data required, and what could go wrong, before pointing out the gaping contradiction with data protection legislation that mandates privacy. David expressed his concern that regulatory requirements are making it increasingly difficult to open a bank account and many entirely legitimate people are being excluded from the banking system, and Bill noted that in a number of countries there were very good reasons for not wanting the government to know about your financial affairs, not least personal security.

The day marked the official launch event of the newest of STEP’s SIGs, the Digital Assets SIG. Leigh Sagar TEP of New Square Chambers gave an introduction to digital assets and the issues they present for estate planning and administration. Together with the panel, he presented the audience with some quite alarming scenarios which left not a few squirming in their seats. If someone has your computer password, they could empty your bank account. If you let someone else use your Facebook account, you’ve committed an offence. If a family member dies, you may not be able to read their emails, or access their accounts. If your relative left online gambling debts that needed to be paid, but you didn’t have the passwords, you would not be able to settle their estate. The panel discussed a number of ways of ensuring passwords stay secure and yet are accessible to those who need them. One of the simplest ideas was to keep a list in a sealed envelope. The session concluded with discussions on electronic signatures and wills and the important, and growing, subject of cryptocurrencies and their taxation.

This year saw the Mental Capacity SIG and the Cross-Border Estates SIG partner on connecting sessions looking at cross-border capacity. Drawing the largest attendance of all the sessions, the panels comprised speakers from 12 jurisdictions providing a round-up of existing and new laws in each, followed by an active panel discussion.

The Business Families SIG session then explored the unique considerations an advisor must consider in an advisory position to a family business wishing to sell, as opposed to non-family entities. The audience heard first-hand accounts from family business owners Ian McKernan of Molecular Products Group and Alex Scott of Sandaire, alongside experts from the advisor community.

The final session was presented by the Contentious Trusts and Estates SIG and focused on the rules against self-dealing, fair dealing, no conflicts and their exceptions, considering the rules in light of recent decisions. Their session welcomed speaker Vicki Ammundsen TEP, who had come all the way from New Zealand.

Joanna Pegum, STEP PR & Media Executive

STEP Caribbean Conference, Cayman

George HodgsonI have just enjoyed a highly informative STEP Caribbean Conference in Cayman from May 1-3, which attracted well over 300 delegates from across the STEP world.

Presentations ranged from the emerging theme of cryptocurrencies, which I suspect is a wholly new topic to many in the audience, to the use of firewall provisions in fending off matrimonial claims.

What really stood out, however, is the changing mood across much of the Caribbean regarding transparency and the rising regulatory burden. Yes, these developments are providing major challenges, particularly in driving costs up sharply across the board.

This was a theme very clearly evidenced in STEP’s Offshore Perceptions research report last autumn. But the message from a string of eminent speakers is that the time is gone to complain about this; it’s time instead to ‘get on with it’ and ensure that businesses adapt to the new environment they are now working in.

This obviously echoes the mood in the UK regarding Brexit, where whatever the views of STEP members on the issue, I sense most agree that we need to now accept it is going to happen and plan on that basis. Indeed Brexit and its potential implications for the offshore world was another key issue which attracted a full house.

The Caribbean Conference, which is now in its 19th year, remains one of the flagship STEP events in the calendar and I look forward to next year’s meeting in Barbados.

 

George Hodgson is Chief Executive of STEP

Making Tax Digital update

UK mapSTEP attended a meeting held by HMRC on 11 October to obtain feedback on its plan to make tax returns reportable on a quarterly basis, and completely digital.

HMRC’s stated objective is to improve the level of service for the public, reduce the cost to the taxpayer, and increase the revenue’s compliance and accuracy.

It says the new system will be the most digitally advanced in the world, and will enable a user to check their PAYE status, their State Pension forecast and any tax credits or allowances.

Apparently there are already close to seven million UK personal users, and HMRC is streaming webinars for basic users, as well as more complex tax users such as unincorporated businesses and landlords.

However, we learned during the meeting that many users with more convoluted businesses and multiple income streams, such as farmers, may find the new system challenging.

Although it seems unimaginable that someone would want to submit their tax return on their smart phone, HMRC points out the software will be mobile friendly, for those who do not have access to a computer or a laptop.

STEP has already flagged that the new system may not be accessible to less capable users, including elderly, or digitally excluded and vulnerable people.

Many may be unable to afford the extra burden of professional advice, a computer, laptop or smart phone, or indeed, the software required to comply.

HMRC recognises that there may be some transitional costs and potential cyber security risks, but believes customers will be pleased with the ‘real time’ system to keep taxes up to date, and notes there will be fewer inaccurate calculations.

HMRC’s webpage hosts a collection of consultation papers for all individual and business customers, agents, software developers, employers and all other organisations that need to provide tax information.

If you would like to provide feedback, please contact me at emily.deane@step.org by 3 November.

 

Emily Deane TEP, STEP Technical Counsel

STEP and PCI Compliance

Credit cards

As part of our ongoing work to ensure the safety and security of our members, STEP is currently working towards becoming fully compliant with the latest Payment Card Industry (PCI) Security Standards. This means that we will be making changes to the way we accept payments and handle sensitive information.

What is PCI Compliance?

PCI Compliance is an information security standard for organizations that handle credit card details from the major card schemes including Visa, MasterCard, American Express, Discover, and JCB. It’s designed to ensure that companies have all the correct measures in place to ensure the ongoing security of the card information they handle.

How will the changes affect you?

Whilst the vast majority of changes will affect internal systems and procedures, STEP will be making some changes to the way we accept card payments:

Change:
We will now be automatically rejecting any emails sent to us that contain sensitive card information (that includes the card number, expiry date and CVV) please note that direct debit information can still be accepted.

Reason:
This information is currently being rejected by way of an email reply, however rejecting it before it arrives with us will increase the safety of your card information.

Change:
We will no longer be accepting or sending faxes in any form.

Reason:
Faxes are fast becoming an outdated method of communication. STEP currently receives such a low volume of faxes that the decision has been taken to discontinue this service.

Change:
We will no longer be accepting payment over the phone.

Reason:
STEP have been evaluating PCI compliant telephone payment options, however given the low volume of telephone payments we currently process, we have come to the decision that the most effective way we can ensure your safety is to remove this option.

The Future:

All the changes we are making to our payment procedures are intended to make your experience with STEP fully compliant with the latest PCI Security Standards. We have recently upgraded our online payments to accept payments in GBP, USD, EUR and CHF.

We will continue to review our payment options to ensure we are providing you with the best service possible.

For any further information on PCI Compliance, you can find it here www.pcisecuritystandards.org.

For any questions relating to payments, please do get in touch, you can reach us by telephone on +44 (0) 203 752 3700, step@step.org and finance@step.org.

 

James Harris is STEP’s Information Technology Manager.

What’s happening to dormant assets?

Post Office Savings Book

The UK government has recently formed the Independent Commission on Dormant Assets which is investigating a revised scheme in order to identify new pools of dormant or unclaimed assets.

The existing scheme was formed in 2008, after the Dormant Bank and Building Society Accounts Act 2008 was passed, which deems bank and building society accounts to be dormant after a lack of customer-initiated contact for 15 years. The intention of HMRC is to locate these abandoned assets and use them to benefit good causes.

The commission is pooling its resources from various finance and industry experts and intends to report its final analysis to the prime minster and the cabinet office by the end of 2016. It will analyse the following:

  1. Which dormant assets can be brought into an expanded dormant asset scheme, and how they can be identified by industry
  2. The projected size of the funding pot this could produce for good causes
  3. Whether with the potential increase of dormant assets being released by industry the current system is able to manage the burden; and
  4. Whether any new legislation should include a requirement for improved transparency from industry on disclosing the level of assets within their sector.

The government estimates indicate there could be more than GBP1 billion of untapped sources of dormant assets which may include stocks, shares, bonds and pensions. Since the Dormant Assets Scheme was initiated in 2008, approximately GBP750 million has been released from banks and building societies and most of the recipients have been charities across the UK.

The new scheme is intended to provide further momentum to pass the dormant funds onto those who really need them in the charity sector. Rob Wilson, the Minister for Civil Society states, ‘More than a billion pounds of assets, that might otherwise sit gathering dust, will go into funding for charities that make a real difference to people’s lives across the country. To build an even more caring and compassionate country we need to transform dormant resources and give the funds to those who need it.’

It is easy to understand how these assets are overlooked in the first instance, considering how common it is for people to manage their assets digitally (see below). Family members may be completely unaware of the existence of bank accounts or stocks or shares, let alone having access to the data and passwords.

Other possible scenarios might be moving home and not redirecting the post, changing names after marriage, mergers between banks and building societies or a general lack of paperwork. These accounts may be unintentionally abandoned for 15 years and later released to an obliging local charity, to the detriment of the unknowing beneficiaries.

However, there are common scenarios which do not give rise to dormant assets such as intestate estates. The rules of intestacy are activated when someone dies without making a will and they determine which surviving relatives will inherit the estate. In the event that there are no surviving relatives, after investigation, then the estate automatically passes to the Crown and will not be subject to the dormant asset rules.

In the event of a testate estate, and a missing beneficiary, the process becomes more arduous due to the fact that personal representatives and trustees (in the case of trusts) have clear fiduciary responsibilities to carry out the deceased’s wishes for their estate or trust. They are under a duty to protect the interest of the beneficiaries. Therefore, if adequate measures have been taken to locate a beneficiary unsuccessfully, it is deemed reasonable to assume they have died, and distribute the funds to other beneficiaries in accordance with the will.

The personal representative or trustee may seek an indemnity from the other beneficiaries to cover the funds, should the missing beneficiaries reappear. Alternatively they may seek a similar indemnity from an insurance company. Where significant funds are involved they may instead seek a ‘Benjamin Order’ from the court, allowing the trustees to assume that the missing beneficiary is dead. In any event, the funds will be distributed, rather than being held awaiting any contact from the missing person. Therefore, the assets will not linger, or be overlooked, and the estate can be promptly wound up, unless they have passed completely under the radar in the first instance.

  • STEP has recently set up a Digital Assets Working Group to address the emerging issues for practitioners in this field. Its purpose is to educate members and providing guidance and resources; and to campaign for greater clarity and uniformity in international laws and the T&Cs of internet service providers.

 

Emily Deane TEP is Technical Counsel at STEP