Nuns' sense

International families with wealth offshore in trust should take a leaf out of the nuns’ book in Co Galway, in Ireland.


In 2014, the nuns took over the running of the Kylemore Abbey and Gardens and since then have continued to enjoy growth, according to the accounts of its operating company Kylemore Abbey and Gardens Limited, last year.


This is more than can be said of many professionally run trusts, in which the beneficiaries and their advisers take no part. Currently private wealth of $9.6trillion, more than 4 times the UK GDP is owned by offshore entities over which the majority of beneficiaries or their advisers have little or no involvement.


On 7th November 2018, the Government published its paper on ‘Exploring the uses of trusts’ compiled by Ipsos Mori in 2016. Its research involved interviewing 40 ‘agents’ which set up trusts for clients and 20 settlors, of which only 2 had set up trusts offshore. Given my experience of setting up trusts offshore I thought I would add my comments to the Government’s findings.  


The motivations for setting up a trust it concludes are


·      Protection from people, this is a conclusion with which I would concur. Parents are almost unanimous in wanting protection from in-laws, excessive spending from their children before they are old enough to be responsible and unwelcome influences; drugs, religious sects or ‘gold diggers’ (you can read more in my book ‘When you are Super Rich who Can you Trust?) Trusts are also very effective in limiting exposure from creditors. This is of particularly important to citizens of the US, who are bombarded by speculative claims from opportunistic creditors eager to win some benefits from spurious litigation

·      Taxes and costs, this is also a conclusion with which I concur – up to a point. Setting up a trust in the UK by a non-dom barely saves any taxes, although there are still tax advantages for a non-dom in setting up a trust offshore. Saving of costs, however – is debatable! I am a great believer that where value is added – it needs to be paid for, but if value is being diminished, I am not so keen. (Another topic I cover in my book). In so many cases I have seen, professional trustees insulate themselves with layers of indemnities and non-interference clauses that as and when troubles brew, resolution is neither swift, nor cost efficient. Furthermore, the fund gets weighed down with legal opinions and professional expenditure with little or no benefit for the beneficiaries.

·      Control! This is where I applaud the Benedictine nuns of Co Galway. So many settlors abrogate responsibility for the decisions and running of their trust to professional trustees with only a fig leaf of control in the hands of a Protector, who has neither the information or funds to do the job of protecting the interests of the beneficiaries properly. As a matter of practice, the Settlor usually has a good working relationship with his trustees, but in the absence of good governance processes and mechanisms in place, this good relationship rapidly turns sour in the face of a dispute or tax investigation.

·      Flexibility. Again, I concur here with the Government paper, but only if the family and its advisers are in control, like the nuns in Co Galway. In the absence of family control, the beneficiaries can find their trust and trustees remarkably inflexible which as and when this happens can make the trust inflexible.


The other finding of the Government paper, was that very few Settlors knew much about what a trust was before approaching an agent to set one up. They were therefore very much at the mercy of their adviser in deciding whether and what sort of trust is good for them and their family – which is another topic I cover in my book.


In the late 70’s when offshore trusts first started to be set up, on the lifting of exchange controls, the chance of anyone finding out who had done what was so remote that trustees had no problem in saying – in print- that in practice, they would do whatever the settlor asked of them. Now such a statement could invalidate the trust as a sham.


With the threat that all governments will now have all the information they need to start an investigation into all trusts offshore they now need, as a matter of urgency, an independent audit – what was good advice in the early 80’s may not be so water tight now.


But for the Benedictine nuns in Ireland who would appear to be fully aware of their responsibilities, they have no such fears. Let’s only hope that other beneficiaries of trusts offshore do likewise.


If you would like to book an appointment with Caroline, please phone 020 3740 7422 or email and if would like to buy any one or more of her books, ‘When you are Super Rich who can you Trust?’ or ‘uncovering secrets, Winning business from Private Clients’ please go to or buy from Amazon.

Get a Grip

Hammond’s ‘Giveaway’ Budget was lamentable.


Where was the rhetoric that you would expect this close to Brexit? What about some new ideas as to what is best for Britain? All we saw was Hammond parroting May’s ending of austerity and then beating on the same, boring, old, political drum. Is it hardly surprising that the BBC was not more joyful?


The Government is so anxious not to let Labour jeer at them for being the party for the rich, that they fail to see what is best for us all. Alex Brummer in the Daily Mail said Hammond needs to stand up to these ‘left wing bullies’; not fear them.


In 2014, George Osborne hiked up stamp duty to an ‘eye-watering’ 10% on sales of homes of more than £937,000. It was introduced to steal a march on Labour, who were gaining ground on their mansion tax. It has now proved an expensive and damaging error, and is causing misery. Instead of raising revenue it has now clearly failed.


Stamp duty raises £12.8 billion a year. It has this year fallen a billion short of what was forecast and is set to further decline over the next five years.


When Mrs Thatcher was in office she was not frightened of lowering taxes, or standing up to left-wing bullies. She proved that, ‘when marginal tax rates are too high, revenues will subside’.


Already young ambitious, hopefuls worry about getting a home. They struggle with student loans and have to rely on the bank of Ma and Pa to get started. Homes need to be more affordable, I agree, but high prices are not going to come down as a result of high taxes; their owners simply won’t sell.


And as if this opportunity was lost on Hammond, he then uses the Budget to make matters worse. Last week he fiddled with the capital gains tax exemption on home ownership. Does he not live in the real world? People buy homes to live in, and on occasions they need to sell. If taxes are too high, buyers disappear. So why make the time to sell shorter?


Under the existing rules, if you move out of your home and live somewhere else, you will still qualify for the capital gains tax exemption on all the gain, provided you sell your home within two years of moving out. Under the rules, proposed in Hammond’s Budget, which come into force in April 2020, this exemption period will be reduced to nine months.


Helen and Martin have a young family. They have been trying to sell their expensive apartment in Chelsea into which they moved when they were DINKies, because they need more space for their growing family. Their apartment has already been on the market for over six months and they need to think about their children and schools.


Under the old rules they could move into rented accommodation and would have two years to find a buyer without losing their capital gains tax exemption. Under the new rules they have only nine months to find a buyer, before part of their gain becomes taxable. And the greater the tax to pay, the less Helen and Martin will have to buy a bigger home for their family.


Julie and Matt are at the other side of the spectrum. They own jointly their £3million home in Putney. Their children have grown up and they want to go their separate ways. Julie wants to live with Toby, and Matt and Julie are struggling to be amicable.


Under the old rules, Julie could decide to move out, and they would have two years to find a buyer. But under the new rules, if Julie and Matt cannot sell the house in nine months, Julie will have to pay capital gains tax on part of her gain on her former matrimonial home.


Hammond’s lack of understanding of how tax affects the lives of ordinary people is staggering. If a tax is not working slash it – don’t make it worse by adding unnecessary time constraints.


Brexit is around the corner. We are an island with an extremely good financial services industry and were once the home of choice of the world’s wealthy. We need to use our freedom to raise revenue, not drive it out. 


I would have liked a Budget where non-doms are encouraged to bring their billions into Britain, where trusts can come onshore and the top rate of tax for corporates is slashed to 10%. Rather than be embarrassed about being ‘Singapore on Thames’ – let’s be proud of it!


The Government must think how post Brexit we need to make the best of what we have got. A buoyant economy, does not just benefit the rich. All homes need plumbers, architects, electricians, estate agents, and curtain manufacturers. Slashing stamp duty will get the housing market moving again which will benefit many more than just the rich. Hammond needs to stop pandering to the left-wing bullies and get a grip.

If you would like to find out more contact Caroline on 020 3740 7422 or on and buy her books, ‘When you are Super Rich Who Can you Trust?’ and ‘How to win business from Private Clients’ from her website or on Amazon.


Not Fair!

One of my longstanding friends who I will call John, is the founder and director of a global business, which I will call MPP Ltd. Over a few decades MPP Ltd grew to become spectacularly successful and both John and his fellow founder and director Jack became very wealthy.  


However, Jack was able to afford a boat moored in Monaco, a house in Cap Ferat and a private jet, John only had a farm in the UK. John may have wanted a lifestyle equivalent to that of Jack; he deserved to, but he simply could not afford it.


John was UK domiciled and paid taxes on his world-wide wealth, whereas Jack was non-UK domiciled and paid taxes only on what he remitted to the UK.


John was often tempted to look at ways to accumulate his wealth tax free using other reliefs – but I always advised him against it. He did not always follow my advice, he had top accountants managing his financial affairs – but each time he tried, in due course he regretted it.


The UK has wide and extensive reliefs for non-UK domiciled persons, which although have been whittled away in recent years, can still provide extensive tax planning opportunities for those who are not domiciled in the UK.


For UK domiciliaries however, there are only a handful of tax reliefs and exemptions; capital gains tax exemption on your main or only residence, spouse exemption for transfers of value for inheritance tax, but they are, by comparison few and far between.


In the good old days, the skill of a tax adviser was to look at the reliefs and exemptions to see how they could be utilised to save tax, often in artificial and complex ways. It was a skill I enjoyed, and put to good use in the ‘double trust scheme’ as well as others. Schemes were a game, and they had legal backing.

Lord Clyde in the case of Ayrshire Pullman Motor Services v Inland Revenue [1929] 14 Tax Case 754, at 763,764 opined

"No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer's pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue"

However, in the past ten years, governments have not only used tax legislation to make it an ‘unfair game,’ but have also become super aggressive towards anyone who tries to play.

For example, in 1935 legislation was introduced which brought income to charge to UK taxation if a transfer (usually of a capital investment) was make to a person, company or trust abroad as a result of which the income arising from it, could still be enjoyed by the UK taxpayer. There was, however, a let-out clause for ‘genuine commercial reasons’ which were not undertaken for ‘the avoidance of tax’.

In recent years, some tax practitioners have turned their attention to life policies (a personal portfolio bond) or say, a Qualifying Non-UK Pension Scheme (QNUPS). The argument being that these structures are fully subject to UK tax, albeit deferred, and therefore could be used as a holding structure offshore for a commercial transaction, since tax was not in fact being avoided.

This argument came before the Tribunal in September this year in the case of: (1) Andrew Davies (2) Paul McAteer (3) Brian Evans-Jones V R & C Commrs [2018] TC06733 and was dismissed.

The Appellants had taken out life policies with a Bermudian provider, which held shares in a company which was engaged in property transactions. The arrangement was designed to defer UK income tax on the income generated by the property development until such time as the life policy was cashed in. The company was based in Mauritius, to take advantage of the beneficial UK/Mauritius double taxation agreement under which income would be solely taxable in Mauritius, at an effective rate of 3%.

The Tribunal agreed that there were commercial elements to the transactions, but decided that the structure was put in place primarily so that UK tax was deferred on the profits of the property development. It decided that the arrangement could therefore be looked through and taxed as if the income arose to the Appellants in the UK with no double tax treaty relief and no life policy. This is particularly harsh for anyone who has entered into such an arrangement, because from September to October 2018 the deadline to report a tax liability passed.

Any taxpayer, who until this decision believed his planning was tax effective will not only be looking at paying UK tax on the underlying income – but in addition, a maximum penalty of 200% for the Failure to Correct (FTC). The deadline was 30th September 2018, just after the Tribunal decision. Under the FTC rules if no disclosure was made before the deadline – whether the taxpayer was aware of a liability to tax or not – s/he will be subject to a minimum penalty of 100% on top of the tax due.

And if a taxpayer thinks that what ‘happens offshore, stays offshore’ s/he should think again. With the Automatic Exchange of Information now in place, all governments will know about all transactions and structures offshore and if what you declare does not match up with the information HMRC is given, it will get you!!!


If you would like to find out more or to book a meeting please contact or phone on 020 3740 7422

You can buy Caroline’s books ‘When you are Super Rich who can you Trust?’ and/or ‘How to win business from Private Clients’ from or from Amazon.

Petty pilfering - good or bad?

Wealthy families have very different attitudes towards petty pilfering by their household staff, in the same way that offices have varying attitudes towards theft of stationary and office equipment by their employees. It may seem ‘small beer’ and nothing to worry about, but small acorns can sometimes turn into giant oaks.


The prosecution of Paul Burrell, Princess Diana’s butler in 2002, and the subsequent outpouring of royal secrets by the aggrieved former employee, wrecked Prince Charles’s reputation and ruined his attempts to rehabilitate himself with Camilla in the eyes of the public. This would never have happened if he and subsequently Diana, had had a more rigorous rule in their households about petty pilfering.


According to Tom Bower, author of Rebel Prince, Prince Charles was allegedly ‘unbothered about pilfering by staff’. The royals receive so many things, many of which are neither liked nor cherished that Charles ‘randomly allowed his staff to sell unwanted gifts and keep the money. Rewarding his butlers and valets, he believed, kept good staff loyal…’ considering their low pay.


The matter of household theft came to the attention of the police, when a director of Spink ‘boasted while intoxicated at a party’ that he was ‘selling a two-foot gold and silver model of a dhow originally worth an estimated £500,000. The piece, he said had been a wedding gift from the Emir of Bahrain to Charles and Diana’.


On investigating further, the police found thousands of pieces including numerous family photos and letters to Prince William in Paul’s home in Cheshire which he had taken from Diana’s apartment in Kensington Palace soon after Diana’s death in 1997.


This is not uncommon.


In my book, ‘When you are Super Rich Who Can you Trust?’ I talk about a client who was elderly and receiving 24 hours care from a nurse. One evening, I saw the nurse dressed to go out to a function wearing one of my client’s brooches, which I asked her about. She said, it had been loaned to her for the evening.


On the death of my client, I was interested to note that the brooch was not part of my client’s estate, but there was no evidence to prove that the brooch had or had not been gifted to the nurse.


In contrast to the household of Prince Charles, the queen’s household, ‘itemised and stored away every gift at Windsor Castle as part of the Royal Collection, forbidding any sales’. There is nothing wrong with making a gift to a member of staff for them to sell, but if the donor genuinely wants the member of staff to get the best possible price for it, it should be accompanied by a simple Deed of Gift and recorded as such.


Some wealthy people may say that they cannot be expected to keep track of their personal valuable possessions. My answer to that, would be to transfer them into trust and make it a problem of the trustees!


If a member of staff pilfers a trust asset, the trustees will be liable to make up the loss if they were negligent in protecting their trust assets from such theft.


Similarly, trustees also have an obligation to make sure that all valuable trust assets are properly maintained – but there again, there are pitfalls.


A common situation, which I also refer to in my book, is where the captain of a yacht is in charge of maintaining the boat. Every year he may take it to his ‘favourite’ boatyard, which pays him a percentage of the work done - and for keeping quiet on the extent of the work.


When I take my car into the garage once a year, for a service and MOT, I trust the mechanic when he says I need new brake pads and windscreen wipers because, I do not know any better. So how is a boat owner going to know if the work listed as necessary really needs to be done, if the Captain and the boatyard are in cahoots?


Trustees in possession of valuable assets, have an obligation to maintain their assets, but not to pay over the top for doing so. They need to conduct a trust audit to ensure that all the trust assets are still there and in proper repair at a proper price. Every year or every other year they need therefore to carry out an independent asset audit, - and if they do not they could be liable to make good any loss or depreciation of value.


If you would like to buy Caroline’s book, ‘When you are Super Rich who can you Trust?’ or ‘How to Win business from Private Clients’ please go to or on Amazon, and if you would like to book a meeting with Caroline, call 020 3740 7422 or email on


Naive, foolish, irresponsible, nincompoop!

One of Tony Blair’s greatest regrets was his Freedom of Information Act. Introduced as a Labour Party manifesto commitment in the general election of 1997, it was designed to make Government more accountable.


Tony Blair is on record as saying, ‘for political leaders it’s like saying to someone who is hitting you over the head with a stick ‘Hey try this instead’ and handing them a mallet!’


He went on to write ‘Three harmless words. I look at those words as I write them and feel like shaking my head till it drops off my shoulders. You idiot. You naïve, foolish, irresponsible nincompoop. There is really no description of stupidity, no matter how vivid, that is adequate. I quake at the imbecility of it…information is neither sought, because the journalist is curious to know nor given to bestow knowledge on ‘the people’. It’s used as a weapon.’


Why was Tony so incensed? Because, the master of spin, wanted to use his soundbite skills and celebrity connections to make money and continue the lavish lifestyle to which he and Cherie had become accustomed. But he did not want this accompanied by a ‘wall of noise’ from the press. It would undermine his ‘legacy’.


Labour peer and university mate of Tony’s, Lord Falconer criticized the Freedom of Information Act, when used ‘by journalists for ‘fishing expeditions’’ he goes on to say, ‘information needs to be handled responsibly and I strongly believe that there is a duty on behalf of the media as well!’


What tosh! Who is to judge when information is handled responsibly or not – surely the matter is subjective, not objective?


The automatic exchange of information under the OECD global initiative, implemented last month, is a case in point. The UK HMRC, I am sure, will do what it can to avoid this sensitive information about its rich UK residents, being leaked into the hands of journalists and thieves. But, it cannot stop its systems being hacked as we saw in the Panama papers or a rogue employee selling the information as we saw with the Bank of Liechtenstein!


But, there is another, far more immediate threat, which is that HMRC will use the information itself to go on a ‘fishing expedition?’


In the manual for the tax inspectors who are to deal with the information exchanged, they are told to look out for a UK resident settlor, who is alive, with a substantial trust offshore, and a person of ‘significant influence’, such as a Protector.


They are then told to approach the trustee offshore, with the claim that the trust was set up to ‘evade’ tax. The existence of a Protector, they are told to argue, is prima facie evidence of a ‘lack of intention’ to transfer unfettered ownership to the trustees and that the trust is a sham. With this prima facie evidence HMRC can then demand to see all the documents, the set-up correspondence and the marketing literature of the trustee company at the time the trust was set up.


HMRC is also told to look, in particular, for high profile settlors to name and shame, and will bring into the spotlight all other parties involved; lawyers, accountants, trustees, banks as well as the Protectors personally.


What can be done? What did Tony do - to protect himself from unwanted attention? He used structuring to protect his income from detection.


Tom Bower in his book, Broken Vows, claims that on leaving office, Tony commissioned accountants and lawyers –  to erect ‘unusual barriers to prevent an accurate assessment of his wealth. All his income would be channelled through a complicated legal structure. At the top was BDBCo No.819 Ltd, a company that owned a clutch of other companies called either Windrush or Firerush. Windrush Ventures No.3 LP was part owned by Windrush Ventures No.2 LP which in turn controlled Windrush Ventures Ltd. The scheme’s advantage was that the LPs, or limited partnerships were not obliged to publish their accounts’.


Non-dom, UK resident settlors, of which there are just under 80,000, should review their structures. If they own assets offshore they need to minimize their risk of an investigation, by doing one of two things; pay a bit of tax and move the trust to the UK, or restructure to introduce more robust governance, without a Protector.


And my advice to any fiduciary, who may be reading this –  find out how to de-risk your business as soon as possible. If you have any client who HMRC may like to ‘name and shame’ you may also find your name in lights – let alone exposed to litigation for negligence.


If you would like to find out more contact Caroline on 020 3740 7422 or email on


Caroline’s book When you are Super Rich who can you Trust? and ‘How to win business from Private Clients’ can be bought on Amazon or go to