A Club for UHNW Families

I am proud to announce BConnect, a Club for UHNW individuals and single-family offices, which combines the connections and expertise of both GFOS and Bespoke Connections to form a ‘one stop shop’.

Our mission is to introduce our UHNW members and single-family offices of which GFOS and Bespoke Connections have, between them hundreds, to investment deals, luxury products and advisory services through our digital platform. We use technology to connect our UHNW members and single-family offices with the opportunities, skills and expertise of our contacts and make the connections between them bespoke and personalised.

My boutique law firm, GFOS focuses on the protection of family wealth and the preservation of privacy, in a fully compliant manner. I was head of the private client department of Simmons & Simmons, and am a practicing lawyer and fellow of the Chartered Institute of Taxation. I have worked for some of the world’s wealthiest families for over three decades and know a lot of people, many of whom share my passion to connect the UHNW community and their single-family offices with investment opportunities, products and services they may not otherwise find.

In setting up Protection Packages for my UHNW clients I am frequently asked to be on the board of their ‘Headquarters’, the board which sets out the strategy for their single-family office or global business empire, either in an executive or non-executive capacity. From this lofty position, I am able to find out what these wealthy families want. They are looking for good returns without excessive costs, freedom from disputes, privacy and meaningful succession.

Ankush Mehta who founded and runs Bespoke Connections, is of the same view. He is in business with a team of 15, working for hundreds of single family offices helping them to find the investment opportunities they are looking for.

With record low interest rates and stratospheric compliance costs, single family offices are tasked to find good investment deals. Many speak highly of the service and connections Bespoke has made for them, but are also aware that if they are to see more deals in real time in their area of interest, across the globe, connections need to be made digitally.

Through BConnect we want to offer you a better way to connect to our UHNW individuals and single-family offices.

For centuries, the private client industry has relied on personal contacts to find the right investments, luxury products and advisers. Each adviser has on average 3,000 – 5,000 contacts, how can you keep in touch with them all, in a meaningful way, if not digitally?

In my book ‘How to win business from Private Clients’ I address this question.  Everyone has an innate fear of the influence of strangers – to build trust, this fear must be overcome. It takes between 5 and 12 touches before this innate fear begins to abate and trust starts to grow. If you only ever do this in face to face meetings – it can take years, Most people give up after just 2 touches – one meeting and one follow up. This is not enough to build trust and win business.

Only 1-2% will buy from a stranger, to win business effectively and efficiently, it is necessary to overcome the ‘innate fear of the influence of strangers’ and to connect more regularly - digitally.

My book sets out an eight-point plan and shows you how with the proper use of digital technology, you can increase touches and build trust electronically, easily, cost effectively and simply – at a click of a button.

If you have an investment opportunity, luxury product or advisory service which you think may be of interest to our UHNW members, and/or you wish to buy my book, simply contact Svetlana who will put you in touch with the appropriate person.

Our launch party is on the 20th March for our UHNW members and single-family offices. If you wish to find out more simply contact Svetlana on 020 3740 7423 or e mail on svetlana@garnhamfos.com

Hugh Grant's hacked off

Last week, Hugh Grant was awarded a six-figure sum from the Daily Mirror Group for a breach of his human right to privacy. The DMG admitted that it had turned a ‘blind eye’ to the unlawful tapping of his phone by its journalists over decades. The compensation he said he would give to the charity ‘Hacked Off’ which was founded to lobby the Government about press intrusion.

But what is all the fuss about, you may ask? Hugh Grant has made a lot of money from being an actor, he should accept that his private life is of interest to the public and journalists are paid to find stories which sell newspapers.

William Hague is on record as having said ‘If you have nothing to hide, you have nothing to fear’.

We live in a world where privacy is a thing of the past. Everywhere we go, cameras are watching us – we accept this intrusion, to keep us safe, our mobile phones tell the world where we are at any time – we accept this intrusion as vital evidence in catching criminals – every-time we use our browser, we leave a foot print about who we are, what we like and what motivates us – we accept it, because the internet gives us more of what we want. Most of us do not care, we are neither famous nor rich, the public is simply not interested in what we do or say, it does not materially affect our lives.

The reason why Hugh Grant took the DMG to court and supports Hacked Off is not that a few journalists listened to his private conversations – but that they could ruin him. Look at how the stories about Kevin Spacey and Woody Allen have affected their lives. People won’t want to work with them, their films may be boycotted, the public has no sympathy.

Politicians can similarly be affected. Would the knowledge that Tony Blair smoked pot at university, or that John Major tucks his shirt into his underpants, or Trump paid a pin up girl to keep quiet about their affair affect how you vote?

Max Mosley, youngest son of Sir Oswald Mosely and Diana Mitford, said that the invasion of his privacy was ‘theft’. He will not be remembered for his presidency of the FIA, his contribution to the safety of motor racing, his physics degree, or his work as a barrister, but for the images of his naked buttocks and orgy with five women, one dressed in a military uniform. Is he now overlooked for offices, positions or invitations, due to the fact that he liked a ‘gang bang’?

In today’s world of invasive technology, we cannot stop the collation of information about our private life – the genie is out of the bag, and no amount of lobbying and campaigning is going to put it back in. But it is not the information we need to worry about, it is how it is to be used, by whom and for what purpose – and of most relevance whether it will materially affect us.

Governments across the world want to raise as much tax as they possibly can. But Governments, like journalists are not above the law. Salacious stories about Hugh Grant may sell newspapers, but tapping phones to get them is illegal. Governments may wish to raise more taxes, but is the collection of offshore financial information, where there is no suspicion of tax evasion, an invasion of human privacy and an abuse of power?

It is neither morally nor legally wrong for UHNW individuals to transfer money to trustees in an offshore jurisdiction. The fact that this is then no longer owned by the tax payer, is a matter for legislators to devise anti-avoidance legislation. It may be irritating, for governments to see so much money out of their tax reach, but this is no justification to invade their privacy and attack them.

Of course, there are some people who have set up trusts offshore who never intended to cede control to the trustees. These people should, in my opinion, be reported under an obligation which the OECD could initiate, to declare a suspicion of tax evasion. But surely it is not right for the government to collect and exchange all sensitive financial information, regardless of any suspicion that tax is being evaded?

Furthermore, it is not a good use of public funds to engage in fishing exercises, and to attack legitimate structures offshore which will only lead to the loss of thousands of pounds in professional fees and little if anything to show for it for the Treasury.

By all means, Governments should pursue tax cheats and dodgers, but they should not waste precious public money chasing butterflies.

If you have comments or would like to discuss matters relating to, privacy, control, trusts and protection of your assets please contact us direct.

Contact :          svetlana@garnhamfos.com

                        020 3740 7423

To buy Caroline's books please press here:

Charities - the biggest scam?

Travelling through the foothills of the spectacular Dolomites with seven of my former Simmons partners, most of them litigators, on our annual skiing trip, I caught the tail end of a conversation. ‘What happens to funds raised for a charity, which is more than it needs – like the funds raised for the victims of the Grenfell Tower disaster?’ I piped up from the front of the bus, not really able to engage fully in the conversation over the drone of the engine – ‘Cy-Pres’.

Of course, the answer is much broader and more worrying than that one word.

Most charitable trust funds are worded so widely, that only a fraction of the funds raised need be spent on the main purpose, such as the victims of the fire and their families. The rest can be distributed to other grant making trusts, a local Council for it to spend on regeneration of the district or on mental health services; if that is what the purpose clause provides.

The doctrine of Cy Pres only kicks in when the purpose of the fund however broadly drafted has been exhausted. If a charity is set up for the relief of a specific disease ‘Xsis’, which is then eradicated, the doctrine of cy-pres allows an application to be made to the court to amend the terms of the charitable trust to follow as closely as possible the original intention of the testator or settlor to prevent the trust from failing. So, if Xsis affects African males living in Uganda, which has been eradicated, the court could change the terms of the trust so that the funds can be used for the relief of ‘Ysis’, as it also affects African males living in Uganda in much the same way as Xsis did.

Although I was not able to follow closely the conversation, what appeared to be the subject of discussion was how little had been distributed and how no-one appeared to be answerable to the complaints of the families who had suffered.

The body to which charities are answerable is the Charity Commission, but this is overburdened and under staffed.

David Holdsworth, the charity registrar in England and Wales, is on record as having said ‘It is unusual for us to be involved in this way as regulator but because of the urgent need of the victims of this tragedy, and because of the great generosity of the public who have given millions to different charities, it was right that we stepped in and helped charities work together in the best interests of those affected’.

By August of last year, the Charity Commission, said that a total of £18.9 million had been raised mainly by three charities; the Red Cross which raised £5.75m, the Kensington & Chelsea Foundation a further £5.75m and the Evening Standard which raised £6.78m. Of this sum only £2.8 million collected had been distributed by August to the victims, less than 15%.

The Red Cross said: ‘Every penny of the £5.75m raised by the Red Cross for the London fire relief fund will go to the surviving victims of the Grenfell Tower disaster and their families’. It said funds it had raised were being distributed on its behalf by the London Emergencies Trust, which had by August handed out £551,000 in grants.

These payments include a £10,000 Fresh Start grant. In addition, survivors who spent more than six hours in hospital can get a payment of £3,500 and those who lost a relative in the fire can get a payment of up to £20,000.

But, what of the remaining £5.25m? What is it being spent on, by whom, and who is making sure it is being spent for the purposes which the donors gave? If the Red Cross has given it to the London Emergencies Trust has it got any responsibility to ensure that it has been spent on the victims of the blaze – no! It is only the Charity Commissioners to whom charities are answerable and it is too busy with its 200,000 odd charities in Britain to keep a close eye on any one of them; and the monies these charities hold are ENORMOUS! In 2015, the top 5,000 charities held between them £17.46 billion – and I thought it was to be spent, - not kept aside for a rainy day.

According to David Craig’s book ‘The Great Charity Scandal’ there are 1,939 charities in Britain for children, 581 for the relief of Cancer, 354 for birds, 255 for animals and 81 for alcohol abuse. The Charity Commission cannot hope to help charities work together for the best interests of those affected, it hardly has the resources to make sure that the funds are being spent for the purposes for which they were raised – if at all.

Is it hardly surprising therefore with so little scrutiny that wealthy individuals seeking to make a difference set up their own  to make sure it is run properly, but this then adds another charity to an already overburdened Commission – and the problems thereby get worse.

From my experience rot sets in where money is allowed to accumulate without proper checks and balances as to who is making the decisions, where the money is going and what for. There are always complaints about how much charities spend on administration and marketing, which can be as high as 50%, but this could be just the tip of a rather stinky iceberg.

I have no solution, maybe you do?

Court Experience

Some say that Court experiences are like your first day of school. At school I always worked hard, handed my homework in on time, was never late, was known as the teacher's pet and got top marks. So I was convinced that if I ever have to go to Court, I'd be alright because I knew the rules of the system. 

I have been in the privileged position of not having had many Court experiences with any of my clients nor being involved in any disputes so when I had to participate in a hearing for an Asian client of mine, I was shocked at how unsettled I felt after. The tactics of the other lawyers were those of unattended bullies and there was little fairness involved; it was like whoever capitulates first is the loser, even if he is on the right side of the law. 

When planning, I always advise my clients to think ahead and remember that you might have to defend yourself one day - my words when drafting or writing documents are always very carefully chosen so that they cannot be misinterpreted or to put my client in a vulnerable position. 

The direction in which the world is headed now, especially with the obsession of transparency, means that undoubtedly, we are going to see a lot of litigation, a lot uncertainty and a lot of wealth structures under attack. Most disputes I've had can be sorted out with a good night's sleep, a nice glass of wine and a heart to heart conversation but that doesn't fly in Court - what was meant to be a few hours hearing turned into a 3 day deliberation over a four word email I had sent to one of the client's advisors!

A friend of mine who is a seasoned litigator called the other side of lawyers ‘lying toe rags’ and the fact that they were manipulating the truth annoyed me even more. Nobody likes being lied to, cheated or insulted but sticking to principles can be expensive.

Imagine what it must be like to receive a letter from HMRC claiming that you owe them a huge sum of money in tax, penalties and interest. The tax advice you were given five years ago, which cost you north of at least £10,000, which you followed to the letter, HMRC now claims is flawed and what you thought you had done, you had not done so now you are to be taxed regardless of the fact you had no idea you are doing anything wrong.

It is not for me to say that HMRC is abusing its powers but what I do think is unfair is that it treats legitimate avoidance taken on good advice in the same way as the deliberate evasion of tax.

The most vulnerable in the UK, I think, are the non-doms who took advice on coming to this country - costing them hefty fees! They were told to set up a trust which would take them outside the scope of income tax, capital gains tax and inheritance tax on all monies offshore - costing them another set of fees. These individuals had no intention of evading tax, they merely followed good advice for legitimate tax mitigation.

It may be in the fullness of time – that these non-doms can prove the attack against them was groundless. However, by the time they have engaged a lawyer to investigate the matter, put forward a good case, and argued it for years, possibly in front of a Judge – they may just find that what they have saved in tax they have spent in legal and court fees – that is if they win. If they lose, HMRC could wipe them out!

But, it is not as if you need to sit there like a sitting duck waiting for HMRC to catch up with you. There are some simple measures you can put in place to ensure that your trusts, whether you are a settlor or in the fiduciary business, are less likely to be investigated. 

To get an independent opinion on your tax position or trust review, or discuss all matters relating to trusts, privacy, control and protection of your assets please contact us direct.

Contact :          svetlana@garnhamfos.com

                        020 3740 7423

To buy Caroline's books please press here:

Digging into Foundations

Foundations for the last century have been used by many UHNW individuals across the globe for much the same reason as settlors of trusts; privacy, asset protection, freedom of distribution, smooth succession and tax avoidance.

Although they serve much the same purpose, they are very different in history and nature.

Private foundations developed from entities set up by residents in continental Europe in the middle ages to fund religious houses.

In 1926, Liechtenstein broadened the appeal of foundations when it enactedthe Personen-und Gesellschaftrecht (Persons and Companies Act, hereafter referred to as the PGR) and made the foundation suitable for use as a vehicle to manage family assets.

Liechtenstein remained unique in establishing private foundations until Panama introduced the Foundation Law No.25 of 1995. Since that date foundation legislation that provides for the establishment of private asset- holding foundations has been enacted by the other jurisdictions, including Aruba, Anguilla, Antigua, Bahamas, Cyprus, Guernsey, Isle of Man, Jersey, Malta, Netherlands Antilles, Nevis, St Kitts, Seychelles and Vanuatu.

Joshua came to see me last week, he was looking to set up a structure for his wealth and was looking into trusts, when his friend Michael told him not to bother with trusts, but to set up a foundation, since they were ‘outside the scope of CRS’.

NO, they are not!

Fiduciary businesses which administer foundations must report to the home country of the founder in the same way as they would if they were administering a trust. The only difference will be the way in which the Governments treat this information once in their possession.

I explained to Joshua that Governments want to tax their residents on the assets they hold offshore and in particular if they are held in a trust or foundation.

However, whereas a trust is an obligation, and is only created if the three certainties are present; certainty of objects, certainty of subject, and certainty of intention, a foundation is a legal entity. Trusts are most likely to be attacked if there is no certainty of intention, under the sham doctrine. The evidence Governments will be looking for is whether the settlor passed total control to the trustees or was power reserved either to the settlor or a third party such as a Protector

Foundations, do not need certainties to exist, they are formed, like a company. Forms are filled in, the foundation is endowed and registered, and hey presto, it exists. The intention of the founder is irrelevant!

The bad news is that not only can it be formed like a company it can also be taxed as if it were a company under CFC rules.

CFC (Controlled Foreign Company) rules enable a Government to tax the founder on income arising to the foundation as if it were income of the founder, if he retains control for himself. Therefore, if Joshua were to set up a Foundation and reserve rights to himself, then he will be obliged to report the income arising to his foundation on his tax return in his home country as if it were his own income, and if he does not do so, he will be treated as evading (not avoiding) tax.

Joshua asked whether there was any way he could continue to exercise control of the assets in the foundation without infringing the CFC rules.

The problem here is that there is little case law as to what would or would not be considered ‘control’. Does it extend to having a seat on the Council, does it apply if control is exercised through a Guardian or Protector – it is simply not known – but the problem with not being known is that it leaves it open for hungry Governments to claim that any form of control exercisable by the founder triggers the CFC rules which would make Joshua liable to tax on all the income as it arises.

Joshua looked crestfallen. I told him not to worry. Like all clouds there are silver lining and we were able to put to him a tried and tested solution, which suited him perfectly and he liked very much.

To get an independent trust review or discuss all matters relating to trusts, privacy, control and protection of your assets please contact us direct.

Contact :          svetlana@garnhamfos.com

                        020 3740 7423

To buy Caroline's books please press here: