SECURITY, SUCCESSION AND SIMPLICITY WITH HAWKSFORD

Jersey has a strong reputation for offshore investment and economic security, Julian Hayden, client director at Hawksford explains why.

For too long, the word ‘off shore’ used in relation to UK property ownership has been associated with tax planning and avoidance, but in reality it’s about good management, flexibility and long-term security.

Over the years, there have been numerous legitimate tax advantages in the structuring of UK property wealth overseas. Recently, the ability to protect residential property from Inheritance Tax has been removed, and there is a programme for levelling the tax playing field as far as off shore and UK companies are concerned.

However, some clear and legitimate tax planning opportunities do remain.

• Commercial property can still be taken out of the scope of inheritance tax through being held by off shore entities
• Interest relief is more easily available to companies than to individuals
• There are opportunities for mitigating both stamp duty and capital gains tax
• Where transactions are within the scope of UK corporation tax, the rates of tax are benign But it’s not all about tax.

Geography is equally a factor, and it’s vital to look at where a client wants to invest and what their motivations are. If the client wishes to invest in UK property, the appropriate structure must be designed to meet their needs.

Some individuals can benefit from the simplicity of direct personal ownership, backed-up by the use of properly drawn wills - which can come with life assurance as protection against inheritance tax on death whilst still in ownership. Others may prefer structures that are part off shore and part onshore.

In many cases, such structures will embrace liabilities to relatively low tax rates, as part of a simple, well-managed arrangement that gives peace of mind without the complexities of sophisticated tax planning. In other cases, an off shore company might still be appropriate even where there is no obvious tax advantage compared to a UK alternative.

Being a UK tax resident with off shore companies can blend flexibility with tax certainty, and could allow wealth to be moved out of the UK without triggering some form of exit charge, if this were to be introduced. Overall, the key message is to preserve flexibility and to keep matters simple, thus allowing clients to sleep at night while achieving the objectives of security, succession planning and asset protection.

Energies should be applied to maximise value and security by keeping assets and their structures in order and documenting commercial rationale, which are likely to be more important than the avoidance of tax.

In all of this, there is clearly still a role for off shore generally, but, for these arrangements to work at their best, a number conditions need to come together, which Jersey is particularly well-placed to satisfy. To accomplish this, individuals need a well-functioning team as well as expert and efficient management.

In this case, the manager, whether as trustee or director, can act as the co-ordinator, working with appropriate property, financial and legal experts. Jersey is the ideal place for this, as it is well-regulated and has breadth of expertise in these areas as a premier international finance centre, with an infrastructure capable of providing the robust good governance, proper documentation and security that these arrangements require.

To find out more about whether off shore property ownership can work for you, visit www.hawksford.com or call +44 1534 740 000