In the mid-1970s I applied to enter the civil service, sat the rigorous one day entrance exam/interview and having demonstrated an aptitude for maths I was promptly assigned to HMRC (then known as Inland Revenue). In my mind, HMRC was a poor substitute for the glamour and excitement of the Foreign Office which I had cited as my preference. Querying why anyone would willing choose to work in tax I resolved to request a transfer at the earliest opportunity – oh the inexperience of youth! Fast forward 45 years with a successful career spent with HMRC, the then mighty Arthur Andersen, FTSE industry, stockbroking and then my own firm, how wrong could I have been and how grateful I am for that initial Civil Service appointment which introduced me to the world of tax.
I specialise in the capital taxes with the focus squarely on trusts and estate. Much of my time is spent advising (to include lectures) my fellow professionals on such matters guiding them through the rules and bear traps. For many years I worked on the STEP Diploma course both as an author, tutor and examiner and I continue to work closely with STEP as a member of the Qualified Practitioner Committee. Since 2013 I have been directly involved with the CIOT on the CTA exam programme in relation to the capital taxes. A former member of the STEP editorial board, I write for a number of publications and have worked with Bloomsbury as a tax author since 2010 - I am the co-author of four annuals (T&E, IHT, CGT and Tax planning) and the sole author of the definitive work on APR, BPR and Heritage Property relief now in its 10th edition.
I have worked in tax for 45 years. As is the case for many practitioners it took me a while to find my preferred specialism - I started out as a generalist before moving into personal tax which narrowed into expatriate taxes complimented with a detailed background in US tax and working understanding of international tax regimes. However, a lifestyle change with the family relocation to the West Country gave me the space and time to reappraise my tax focus and for the last 25 years I have specialised in the capital taxes.
The tax scene has changed beyond all recognition in those last 45 years both in terms of technology and application. That early reliance on paper records (I can still remember the old HMRC surcharge ledgers and the myriad paper files with their tiger tags) has been almost entirely replaced with electronic data -the current tax world is truly both immediate and online. It demands a separate skill set which presents its own challenges such that technical knowledge is no longer enough. HMRC itself has become considerably more progressive and notably more aggressive in its approach. Recent years have seen a raft of penal anti avoidance tax legislation, the introduction of GAAR and DOTAS, tougher penalties for non-compliance, targeted offshore focus and ‘name & shame’ regulation. Much of the practitioner’s time is now taken up with the impact of regulation and compliance i.e. Trust registration service (TRS), anti-money laundering paperwork.
In the past I was always bemused that so many of my fellow professionals not only fail to understand the trust vehicle and its uses but display little or no interest in acquiring such knowledge. Certainly, if trusts were assigned a colour it would likely be grey reflecting their perceived negative connation as complex, expensive, legal red tape, messy, inflexible. The trust vehicle is not the ‘new kid on the block’ but rather has been around for centuries.
It is critical to any estate tax planning routine but more than that it has the ability to offer real protection from capital dissipation by reckless, vulnerable or immature beneficiaries. In recent years my fellow tax professionals have demonstrated much more of a desire to get to grips with this subject and I suspect that this is partially driven by client awareness of trust usage often prompted by discussions with their family solicitor. It is also interesting to note that younger practitioners are actively choosing to widen their knowledge in this area evidenced by increased numbers sitting the specialist CTA capital taxes papers. There has also been a growing trend towards lifetime planning using trusts where the settlor can exert a degree of control and flexibility which would denied to them through outright gifting. This is often prompted by a desire to protect the family wealth from dissipation through divorce.
The current turbulent political climate has prompted a desire to harness existing relief for business and agricultural property in the event the reliefs are restricted or withdrawn under a new government. This is particularly the case for the investment landlord of agricultural land. By contrast, the turmoil in the financial markets has led to a marked increase in the purchase of fine arts and other valuable collectables as an alternative means of inflation proofing accumulated wealth. Such assets can benefit from the heritage property relief which may be claimed in succession by multiple generations. However, whilst this remains a complex area of tax law with the scope of relief application often misunderstood, it is an area with which today’s tax practitioner must become more familiar.
It is true to say that the taxation of trusts with its natural crossover into the legal aspects of Trust law does not sit easily within the general tax practitioner’s technical knowledge bank. The last major change for the taxation of onshore trusts was in March 2006, however, it is surprising that even with the passage of time many practitioners have yet to embrace that change and continue to hearken back to the old law. Estate planning routinely pivots on the use of trusts and that demands a current technical understanding of Trust tax law. Recent years have seen minor tinkering around the trust edges but the warmly welcomed HMRC initiative to simplify the tax treatment of trusts first launched in 2013 failed to deliver and eventually ran out of steam in March 2021.
In contrast, the offshore trusts arena saw major changes introduced in FA2017 which coincided in the change in the deemed domicile rules. This combination has radically altered the landscape particularly for those settlor interested trust created by former non domiciled settlors. As a result, the use of offshore trust have become far less popular with fewer being created whilst faced with the increased tax exposure and rising costs due to foreign jurisdiction regulation, many established trusts are being wound up. The tax implications of winding up at the very end of the life of the offshore trust often provides the general practitioners first introduction to this complex area of tax law.
Regulation, anti-avoidance measures, cross border issues, prompted disclosures. As has always been the case, the tax abusive activities of the few have led to draconian rules which impact on all but this is never so true as in current times. This all makes for a challenging role for the professional tax advisor who must guide not only the client through the maze of constant changing law but must also ensure that he (and his organisation) adheres to the regulation demanded by their own professional body.
I will be long since retired by the time this moves from being a potential to a reality but even an old dinosaur as myself appreciates that AI has its place. However, my concern is not so much on the use but rather the control of that use – that is where the real work should be focussed.
