Today

16 December/January April/May 2011 2015/16 Kensington, Chelsea & Westminster Today www.KCWToday.co.uk 020 7738 2348
December/January 2015/16
Kensington, Chelsea & Westminster Today
17
Business & Finance
Business & Finance
online: www.KCWToday.co.uk
Tax “Avoidance”
Exploding the
Myths
By Alan Pink FCA ATII
Tax avoidance keeps hitting the
headlines, with the Chancellor
announcing yet another “crack
down” on this nefarious activity in his
Autumn Statement on 25 November.
Most people have a vague idea that tax
avoidance is nasty, even if not illegal:
but the problem is that no-one, not the
politicians, the press, or even the Revenue,
have ever actually arrived at a reasonable
definition of what it is.
One perfectly reasonable definition
that I’ve heard includes giving up smoking:
after all, it’s a deliberate act you take,
as a result of which you pay less to the
Treasury and keep more in your purse. But
not many people would regard giving up
smoking as morally reprehensible on that
account.
So shall we shift the definition a bit,
and define tax avoidance (which always has
overtones of public odium in it these days)
as actions taken by people to reduce their
tax which the Government doesn’t want
them to take? This leaves out giving up
smoking, because the high taxes on things
like tobacco and alcohol are obviously
designed by the “nanny state” to influence
people’s behaviour, and make them do
what’s good for them.
But I’ve got two problems, myself, with
this revised definition:
Why have we got a moral duty to do
whatever the Government wants us to
do? Or, putting it the other way round,
why should it be treated as immoral
to do something that the Government
doesn’t want us to do? How have the
Government’s wishes become suddenly not
just a legal duty, but a moral duty as well?
It’s very often not at all clear, in real life
situations, what the Government’s wishes
actually are.
To take an example of the second
problem, let’s assume there are two old
ladies living next door to each other. Each
inherited a modest share portfolio from
her late husband, who died many years
ago. Each wants to give away these shares
to her grandchildren, who really need the
income more at this time in their lives than
they ever will again.
Mrs A gives the shares to her
grandchildren: one third of the portfolio
each. Mrs B, on the other hand, for
reasons that have nothing to do with tax,
decides to give her shares to a trust for her
grandchildren.
Mrs A wakes up one morning to find
a letter from her accountant telling her
she’s got a whopping great tax bill. Mrs B’s
accountant, on the other hand, says that
she can avoid paying any tax on this gift by
“holding over” the completely imaginary
“gain” that she is treated as having realised
on disposing of the shares.
Mrs B is certainly avoiding tax by
making a transfer to the trust rather than
direct to her grandchildren: but why do the
Government apparently want her to set
up a trust for them rather than making an
absolute gift? It beats me.
One problem with the picture of tax
avoidance that is assiduously promoted
by the politicians and the Revenue is that
it is based on an unspoken assumption
which is actually completely absurd. This
assumption is that, if only wicked “tax
avoiders” would leave the UK tax system
alone, it would produce a fair result:
everyone would pay their “fair share of tax”.
The example of the two old ladies is just
one of very many that I could put forward
to show that our tax system produces
anything but “fair” results, if left to itself.
Why on earth is it fair for Mrs A to pay a
large amount of tax on an imaginary gain
that she hasn’t made?
You could go further, and get deeply
political: why is it “fair” for wealthy people
to contribute not just more money to the
Exchequer, but a higher proportion of their
total income, because of higher tax rates
applying to high incomes etc? Whatever
politicians and political theorists think,
few of the wealthy themselves think it’s at
all fair and personally I can’t find it in my
heart to blame them.
Alan Pink FCA ATII is a specialist tax
consultant who operates a bespoke tax
practice, Alan Pink Tax, from offices
situated in Tunbridge Wells. Alan advises
on a wide range of tax issues and regularly
writes for the professional press. Alan has
experience in both major international
plcs and small local businesses and is
recognised for his proactive approach to
taxation and solving tax problems. Alan
can be contacted on (01892) 539000 or
email: alan.pink@alanpinktax.com. His
book, The Entrepreneur’s Tax Guide, is on
sale from Head of Zeus for £20, or from all
good book shops.
Entrepreneurial
tips for success
By Emily Eaton
Missourian Julia Langkraehr is a
businesswoman who came to the capital
to pursue her entrepreneurial dreams.
Langkraehr has made her mark finding
perfectly tailored, small businesses to fill
commercial spaces.
Along the way, Langkraehr
experienced redundancy, startup, and
failure, but it is a city success story.
Recently, Langkraehr exited the business
and reinvented herself; now looking
to consulting for other businesses and
guiding them down the path to success.
Once a model, Langkraehr
considered fashion, but unwilling to sit
behind a computer designing all day, she
pursued other avenues. Langkraehr was
recruited into the ‘greying industry’ of
shopping centre retail, leading her across
the Atlantic.
“In 2001 there wasn’t really a buzz
about entrepreneurs. It was a real man’s
world.” After being made redundant,
Langkraehr started up her own business,
“I thought, ‘Oh my gosh there is a niche
here and I can do it for myself instead of
a big landlord!’”
Langkraehr stresses the importance
of forward planning and balancing the
books.
It pays off, with a lot of hard work
and help from unlikely corners of her
extensive network. This became a
teaching mantra: “You need to build your
network before you need it.”
Langkraehr is remarkable in her
ability to form productive partnerships,
even with competitors. She built a
fortuitous working relationship with an
American expat in Russia, that saw the
expansion of Retail Profile into Europe.
“For me, if you are going to go into
another country you either have to be
boots on the ground and run it yourself
or you have to find a local partner
you match in terms of goals, values,
outcomes, and timelines.”
Having built success, Langkraehr is
keen to replicate this in other midsize
businesses and has completed hours of
training as a business coach. “I want to
build a lifestyle business to help other
founders and entrepreneurs and CEOs
who have matched values with me. I
want to work with companies who are
open, honest, and want to learn and
grow.”
Langkraehr, a mix of Mid-West
charmer and city sophisticate, stresses
the importance of building relationships
all around you. Human capital, she says,
now more than ever is of importance
to the business world in the age of the
instant connection.
Langkraehr’s 3 Quick Tips to Success
Hire a coach: the best athletes in the
world do, so why wouldn’t you pay
somebody to help you be your best?
Find a peer group: ideally people that
you aspire to be like. Find a peer group,
because you can learn and share and
grow with each other. Don’t just hang
out with corporate people, if you’re
an entrepreneur, hang out with other
entrepreneurs.
Convince a mentor: Find somebody
you respect, who excites you. Get
their wisdom for ‘free’ - buy a coffee
for them, or go to where they are to
make it convenient in their schedule,
or treat them to a beautiful breakfast at
theWolseley.
Caltrics, a guide
By Emily Eaton
Getting the right balance in life for any
busy London professional is like walking
a tight-rope. Despite recent advances
in technology, which make managing
conflicting roles easier, with so many
hats to wear, keeping a conscious track
of everything can feel like trying to herd
house flies. Or at least, so you might think.
Newly launched company Caltrics
(caltrics.com) is set to revolutionise the
way we manage our electronic calendars.
The company, which launched earlier in
2015, allows the end user to curate their
own calendars in a few simple moves,
synchronising information across each of
your devices. And all for exactly no cost!
The Caltrics site motto is “find it,
add it, live it”, and it really is as simple as
that. Once the user has registered for an
account with their email address, they can
then browse the hundreds of calendars on
offer, a lot of which are London-specific
and broken down into subsections like
‘art galleries’, ‘education’ or ‘politics’.
Once these are added to an account, they
will then be automatically added to any
devices associated with that email address;
this is across iCal, Outlook, and Google
Calendars. In many of these applications
the various calendars are often colour
co-ordinated so you can tell them apart.
Caltrics functions in conjunction with the
main electronic calendar suppliers either
by the click of a button or importing from
HTML links to your unique calendar. The
site is highly intuitive and user friendly
with clear step-by-step instructions as how
to create and edit a calendar tailored to
your exact needs. For example, you may be
a Fulham resident with children in school,
living in the shadow of Stamford Bridge.
Well, with Caltrics, your calendar could
feature London events, Fulham term dates,
and Chelsea at home games all at once;
making the city, homework, and football
traffic easily navigable at the click of a
button.
Caltrics is also useful to businesses and
organisations who are trying to spread the
word about the work they are doing. For
a small fee, you can create a ‘publisher's’
account and help keep your target audience
up to date with your schedule. You can
import your calendars via .csv or any other
workable format, there are also options to
customise your account, calendar or event
with images and blurb. Any publisher can
also gather vital information on who is
following their calendar.
Caltrics is getting behind women’s
sport at a perfect time when public interest
is piqued. Now, with the help of the
Caltrics online calendars, loyal fans can
keep up to date plans in the diaries for key
matches and games.
It truly is an ingenious tool that saves
time for end users who might have been
surfing multiple websites for key dates. It
also cuts back on the effort for businesses
and organisations, allowing them to get to
know their engaged client base. With ease
of use and functionality prioritised, finally
someone is taking the hard graft out of
organisation.
Not for love
nor money
We marry – or choose not to
marry – for a whole raft of
different motives. So when a
person in a long-term relationship says
“We’re happy as we are; as far as I’m
concerned, marriage is just a piece of
paper”, it may, perversely, be a sign that
they’re keenly aware that marriage is,
indeed, so very much more than just a
piece of paper.
Marriage brings valuable tax
benefits. My guess is that as many
deathbed marriages, particularly between
older parties,take place to secure the
Inheritance Tax spouse exemption as
seize the last minute chance to express
a spiritual commitment to a long-term
partner.
Despite the financial plus points,
many people have an emotional aversion
to marriage. Even more avoid marriage
through fear of having to share assets if
the marriage ends in divorce. I can’t deny
the legal reality of that fear though a
prenuptial agreement may go some way
to assuage such concerns.
Although the obligation to
maintain children from a relationship is
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independent of marital status, the fact
remains that while the divorce courts
have a pretty free rein in dividing assets
on divorce, the rules are completely
different for unmarried couples.
A division of assets when cohabiting
couples split up depends not on need but
on prior agreement between the parties
(express or implied) or on quantifiable
financial contribution. So while the
recent split between lecturer Rupert
Ashmore and his former student Kim
Woodward after 25 years made the
headlines (sample: “She was just a lodger
I loved no more than the dog”) her court
award of £275,000 was based on Miss
Woodward’s financial contribution to
the couple’s home and business rather
than any moral right, personal need or as
a consequence Dr Ashmore’s behaviour
(described by the judge as “callous”
and “selfish”).
All, however, might change if the
Cohabitation Rights Bill 2015
becomes law.
The bill, which is currently going
through Parliament, reflects the current
disparity between the division of assets
on divorce and on the breakdown of a
long-term relationship akin to marriage.
Under the bill, agreements between
co-habitees as to the division of assets
would only be binding if they followed
a process similar to that recognised as
essential for a pre-nuptial agreement
to be persuasive; the court would have
power to divide assets based not only on
financial contribution, but also on the
needs of the parties, their conduct, and
any non-financial contributions to
the relationship.
The bill neither seeks to detract
from the sanctity of marriage, nor give
cohabiting couples all the tax and other
legal benefits of marriage. But it does go
some way towards properly reflecting the
changing nature of relationships within
our modern society.
Jim Sawer,
Private Client Partner,
Thrings
THRINGS
SOLICITORS
Photograph © Ewan Roberts