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Palladium Newsletter - Winter 2017

Happy New Year to all our clients and associates! 
 
2016 was certainly not an easy year for anyone with connections to the offshore industry – client, service provider or otherwise.  From the increase in tax transparency to the decrease in tax benefits for UK Res Non-Doms, what should clients be thinking about now we enter the new year?


The new year poses questions for clients on optimization of trusts and funds. The legal and regulatory changes has forced practitioners to review the jurisdictions and what is on offer and how the subtle differences could work best for you.
 

Low tax ? Low priority !

As we touched on in our previous newsletters, there are still some advantages to be had from setting up an offshore trust or company. With there being so many options, which one should clients consider choosing?

Following the adoption of the Common Reporting Standards in over 100 countries, all jurisdictions are now on a level playing field with regard to the exchange of information.  There is no longer any merit   in   creating  a  structure  in  a  place  which previously


afforded higher levels of  privacy due to the remoteness of the location and an “under the radar” vibe.
 
Whilst the tax rate will always be part of the consideration, Palladium would argue that this should not be the determining factor.   Most offshore and many onshore jurisdictions have low tax regimes.    
 
The most important things to look for in an offshore jurisdiction are political stability, good legal framework, a choice of robust banks, a specialised workforce and modern infrastructure.  If a jurisdiction possess these aspects, it is also more likely to have sophisticated anti-hacking software and up-to-date secured IT systems, ensuring personal information will only be shared with those it is meant to be shared with (i.e revenue authorities, not journalists as per Panama Papers!). 
 
Palladium would argue that there are certainly several key players when it comes to the above criteria including but not limited to the UK, Isle of Man, Jersey, Luxembourg, Switzerland and Singapore.  All of these jurisdictions are highly regulated, which ensures service providers adhere to requirements for staff to hold professional qualifications, comply with anti-money laundering procedures and make sure that clients’ business is safely guarded.  These qualities, in turn, mean that they are all on the “white list” and are not tarnished unfairly with the same brush as Mossack Fonseca and consequently Panama. 
 
There are also many other factors to consider such as:
  • Nature of business or type of trust– do you need specialised legislation?  For example, e-gaming laws or reserved power trusts which are available in Singapore?
  • Minimal capital requirements – Perhaps you would prefer an initial contribution of $1 rather than €12,500 in which case BVI would be appropriate
  • Language and currency – Perhaps a client wishes to avoid US Dollar?
  • Geographical location – Would you like to be a trustee or a director?  Do you need to be resident in that jurisdiction? Is the time zone convenient for communications?
It makes sense to ensure that the tax regime of any country is compatible with a client’s requirements, but this should not be the driving factor in where to create your structure.   What you save in tax could cost you in reputation or quality of service.    
 
Palladium is dedicated to ensuring our clients are presented with the best option for their business or wealth planning requirements and will only consider reputable and robust jurisdictions. 

Big data-driven services

“Big data-driven services” and its variations have been buzz-phrases in the legal industry in 2016 when it comes to converting opportunities into competencies as well as overcoming challenges faced by legal practices within the ever-converging legal industry. Whilst this may mean complex data-analytics algorithms for large firms, for a boutique such as Palladium, operating within a market niche across the globe, this means maintaining an organised updated database.

The   encroachment    from    large   US   firms   and
alternate business models have had a multiplier effect in terms of competition in the trusts, estates and fiduciary services niche in the UK. Alternate business models specifically, has enabled, incumbents of related sectors, such as accountancy firms and family offices to widen their services to cover offshore corporate services and fiduciary roles within jurisdictions of the UK and the Channel Islands.

Palladium Advisors is currently undertaking an exciting internal project to organise its database of jurisdictions and collating updated information on the 20 jurisdictions that we currently offer our services with the ultimate aim of increased service efficiency. This will provide us a template for expanding services into other viable jurisdictions while offering quick and effective services to our clients.

Security and privacy are at the pinnacle of our agenda. That is why we have partnered with our trusted IT Services provider, to maintain banking-standard data security and robustness of infrastructure.

We believe this will enable us to stay ahead of the competition, in providing our clients with the excellence of services we maintain. We feel this is why our clients have stuck with us through the turmoil, market slumps and uncertainties faced in by clients as they are assured of the robustness of our networks, our ability to adapt to changing situations and the no-nonsense / what-you-see-is what-you-get fees that we offer.
Failing to prevent is preparing to fail!
Financial institutions and service providers are facing ever increasing responsibilities and the maelstrom is not abating.
 
In the UK, 2017 sees the introduction of both civil and criminal offences for professionals which help to encourage, assist, facilitate or fail to disclose tax avoidance and evasion. 
 
The civil offence contained in the Finance Bill 2016 levies a fine of 100% of the unpaid tax on anyone who engages in conduct which allows a person to evade tax, unless they make a disclosure to HMRC.
 
The Criminal Finances Bill 2017 is also set to contain a new corporate offence of failure to prevent UK and overseas tax evasion.  The corporate body may not necessarily receive any benefit, nor may the tax evader even have to be charged in order for the corporate body to be prosecuted.
Is there a defense?

The statutory defense available to the relevant body is that it must be able to show that it had reasonable prevention procedures in place designed to prevent the facilitation of UK or overseas tax evasion or it was not reasonable in all the circumstances for it to have in place any such prevention procedures.


Whilst no one is condoning professional service providers  assisting  clients  with  tax  evasion,  this
is yet another responsibility that banks, trust companies and financial institutes have to assume. Another procedure to create, another topic to train employees on and another thing to potentially to be accused of (in addition to bribery, corruption, financing terrorism, money-laundering, failing to disclose, tipping off, not having correct procedures in place and not training your staff properly).   
 
Is it not telling that the NCA is inundated with so many suspicious activity reports that HMRC is considering changes to the legislation? Financial service providers are becoming almost over-zealous and paranoid due to the increased risks and responsibilities delegated to the industry.
 
And who can blame them? They are having to step up to the mark of being the front-line defense against any kind of financial crime and are as a secondary activity or even primarily now the police of the world!

Below please see some article links for updates on these and other subjects.

Wishing you a happy new year,
 
Stephen

Our Vision

We strive to deliver excellence at reasonable cost.
 

Commercial ethos

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.

Learn More

We hope that you find our website a helpful and informative introduction to our services. Please contact us if you have any questions.
 

Cayman, BVI, Channel Islands and other UK dependencies to be forced to open their clients’ books even more:
https://www.theguardian.com/world/2016/dec/20/uk-mps-tax-havens-criminal-finances-bill-overseas-territories
 
Singapore passport the most powerful among offshore financial centres:
http://www.straitstimes.com/singapore/singapore-passport-is-the-worlds-second-most-powerful-2017-passport-index
 
Public name and shaming of tax evasion enablers in the UK:
https://www.theguardian.com/business/2017/jan/01/hmrc-tax-evasion-enablers-fines

Will there be a US-china trade tax war – and what will the consequences be?:
https://www.bloomberg.com/news/articles/2017-01-16/china-s-cic-says-trump-creating-u-s-investment-opportunities
 
Singapore increasing offshore client scrutiny:
http://www.reuters.com/article/us-singapore-tax-idUSKBN14Q0JU
 
Donald Trump promises to repatriate trillions of dollars from offshore centres - is this the real reason for stock market fever?:
http://www.bbc.co.uk/news/business-38584084

 

Read More

Our dealings

with the offshore fiduciary market, and our onshore commercial background in the City, have convinced us that we provide a unique and valuable service.

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