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Palladium Newsletter - Anniversary Issue 2016
With summer well and truly gone, we are now in our “busy period”.  With the end of the year fast approaching, there is a lot business to tie up before people start taking off on their Christmas and New Year breaks. 

For Palladium, this November marks its 7th official year in business – and what an interesting 7 years it  has  been!     With  a  war  declared  on  the  use
of offshore structures and high net worth individuals, Palladium have managed to weather the storm and continue to increase its client base.   This is largely due to the quality of business which we accept, our willingness to be a subject of regulated authorities,  and the wide variety or services we are able to afford to our clients.  We do much more than create offshore trusts!
 

Palladium Advisors
Some of you may have noticed our re-brand from ‘Palladium Trust Group’ to ‘Palladium Advisors’.

The core reason for this  is that we offer much more than just trusts and we wanted  our name  to reflect that. In  fact, We don’t just act for wealthy families setting up family structures. To give you an idea of the breadth of our offering, for example, we:
  • Create structures to facilitate private equity and venture capital investment e.g. BVI regulated private mutual funds or New Zealand Limited Partnerships
  • Establish holding companies for global trading conglomerates e.g. Luxembourg, Isle of Man, Delaware, Malta, UK and ten further jurisdictions
  • Assist private and corporate clients with banking facilities and account opening procedures eg Switzerland, Singapore, Isle of Man
  • Compose and orchestrate fund licence applications for hedge fund managers– Cayman, BVI, Luxembourg
  • Establish Sharia’ compliant joint ventures e.g. BVI for real estate investment
  • Act as the London based ‘consigliere’ for UHNWIs in matters both material and trivial
Above all we stress that we are clients’ trusted advisor in any matter we are asked to assist with.
 
The overwhelming  majority  of our   work  involves  assisting   clients  with  wealth structure set up and administration.

One notable addition to our advertised services is our consulting on wealth structure and commercial projects. We now offer this publicly, it is a practice area we have been asked to assist with repeatedly and for which we now created some inertia. Please enquire for more information.
 
Common Reporting Standard (“CRS”) - how do you feel?
As we enter into the brave new world of the CRS I have spoken to many practitioners who seem as bewildered as the others about how we got here and where it is leading. While the ostensible aims of the CRS are without question morally correct, which includes preventing unlawful non-payment of taxes due by private citizens, its methodology seems often flawed since it relies on human beings and their governments to implement.
 
The process by which information is transferred is a  first  issue  to  raise.     Depending  on  the  CRS
agreement a country has in place, either its tax authorities or its banks - and their employees – are charged with the duty of transferring the information. This allows for some flexibility as to what information is communicated, especially when left to a banks or trust provider’s discretion (one potential failing), and this shortcoming is compounded by the fact that the laws are fiendishly complex and difficult to interpret. Furthermore, the burden of this information sharing is placed on trust or corporate service providers, banks, accountants and so on and they are often loathe, or not permitted, to pass on this seemingly arbitrary cost onto their clients who are being charged to have their right to privacy somewhat diminished.
 
Perhaps more pernicious is the use of the information by the recipient of the tax (read: financial) information in jurisdictions with reputedly corrupt or even criminal governments with a long history or involvement in rigged legal proceedings, undue taxes being levied on – or even kidnapping or worse of – wealthy (and often powerful) individuals or families.
 
These are a couple of oft cited grey areas which the CRS evokes in practitioners and their clients and I wonder where you the reader, think this is going.

Some argue that the core of the current Anti Money Laundering regime (the CRS’ precursor?) sprung out of legislation implemented hastily after the atrocities of 9/11/2001 (eg Patriot Act in the US or Proceeds of Crime Act in the UK). What the CRS is and how it functions in its current guide probably would in the main have seemed draconian and unacceptable to private citizens in 2000; now however it has caused little outcry in mainstream media, unless we are mistaken.

This information collection drive, of course, is occurring in an era with one of the least faith placed by private citizens in their governments and the system they command and protect. Apologies for labouring the point made so regularly but look and hear what is happening with Brexit/UKIP, the rise of the far right in France, Germany, Hungary, Holland, potential break up of the EU, Brazil’s political mire, and dare I mention the self-publicist extraordinaire DT and the US’ consequent (presumed) trajectory. Private citizens are revolting also commercially by widespread use of disruptive technology which relies on borderless shared networks to function rather than an overbearing nation state. Note that the extent to which taxes are often – allegedly – immorally avoided by the latest app!

Are we at an inflection point where the erosion of private rights will cease after the CRS and the public will refuse to divulge more information (see later on ‘Trial by media’)?
 
Most of our clients, whether from ‘developing’ or ‘developed’ countries, complain that once a tax authority decides you are a target and have the resources (this is a key point), the tax authority exploits the continued distress and uncertainty of outcome in reaping more than the due taxes owed (whatever the original reason) - and it is difficult to foresee that the CRS will alter this modus operandi of tax assaults.
 
This is dare I write a commercial way of tax authorities using the knowledge available to them, however I ask you whether you think the CRS will overstep the mark in its ultimate deployment and whether the rights of individuals should be forsaken in this way?
 
Most importantly any constructive suggestions on a more sensitive path forward would be welcome…
 
Meanwhile as a final point, it’s worth mentioning that tax authorities are now not the only people to which clients feel they must be accountable to.   ‘Trial by media’ over personal tax affairs is now a genuine fear for many high profile clients.  There have been numerous cases of celebrities being named and shamed in the press about their use of (legal but some say ‘immoral’) tax avoidance. For example, do you recall how the memory of David Cameron’s father was dragged through the mud following the Panama Paper leaks – in this case, the maligning of the arrangement was surely not fair given all due tax was properly declared and reported. Further, the information disclosure itself by the consortium of journalists resulted from a receipt of stolen property which in every country I know of is a criminal offence.
 
Tax has become such a publicly ‘moral’ issue such that no high profile client wants to be seen to complain about the CRS or be seen as “non-compliant”. In essence, may they have been gagged by the media?  Many clients are happy to co-exist with the CRS system so they may be portrayed as ‘clean’ and ‘above board’ . At the other end of the spectrum, beyond fear of kidnap and murder, clients are further preoccupied that any leak from the tax authorities following implementation of CRS may lead to their financial affairs becoming headline news, irrespective of the legality and perceived morality of the ‘why’.
 
Maybe in this enlightened age we should all just publish our tax returns?

 

Excluded Property Trusts
Whilst there has been a shake-up of the UK Res Non Dom Rules this year, it is worthwhile remembering that all is not lost - excluded property trusts still work for those who are not yet deemed UK domiciled i.e. have lived in the UK for less than 15 of the last 20 tax years.
 
Transferring your overseas assets into an offshore
trust before you are deemed domiciled will still, generally speaking, afford some protection from inheritance tax.  They may also assist those who are already being taxed on a remittance basis.
 
Although it appears that this rule is fully set to come into play on 6 April 2017, one can still hold out hope that perhaps this has been pushed to the bottom of the priority list.   Following the decision to leave the EU in June, might the Chancellor of the Exchequer consider a delay?  We await the Autumn statement to find out!
 
Palladium is currently able to create trusts in Palladium’s own regulated trust companies in BVI, New Zealand as well as in partner trust companies in Jersey and the Isle of Man. Our London fee earners are STEP accredited.
 
We are also able to help with private trust companies and foundations should a trust not be suitable.  If there is anything Palladium can assist with in the run-up to Christmas, please get in touch!
 
Stephen

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While the offshore world faces challenges and is subjected to more scrutiny than ever before, Palladium’s commercial ethos is centred on due compliance as well as efficiency and robustness in the delivery of its services.

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