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



Best news of the decade

Last week at a fringe meeting at the Tory conference, Brexit Secretary Dominic Raab told Brussels that the UK will slash Corporation Tax in the event of a ‘No Deal’ on the exit from the EU.


The Labour retort ‘it will turn Britain into a tax haven for the super-rich’ omitted to say, that it would also give the UK a competitive advantage for businesses like Amazon, entrepreneurs and the work force in Britain.


Raab’s comments were independently endorsed by Sajid Javid, the Home Secretary, who said, that if the UK could save on its divorce bill from the EU, he would choose to use the money to cut taxes – alleluia!


Javid went on to say ‘We are taxed enough as it is. Give it back to the people’. He went on to say, that post Brexit, it would be possible for the UK to look at some of its rules and regulations ‘currently in place to make the UK a more attractive jurisdiction’ in which businesses will want to invest.


Jeremy Corbyn’s stock answer is ‘the Conservative’s Brexit plans would turn the UK into a low tax, low regulation ‘Singapore-on-Thames’ in a bid to undercut the EU! – Brilliantly put – yes, precisely. What is wrong with a bit of healthy competition? The EU has always been envious of the position of London on the global financial stage – well with lower taxes it will become even more attractive.


The idea, put forward by Javid to slash corporation tax rate to 10% is very attractive. Both Ireland and Cyprus, which are within the EU are at 9% and both jurisdictions have seen a boost to their economy. Setting the rate at 10% would be just above the lowest acceptable rate in the EU, but would nevertheless make the UK most attractive.


As Thatcher proved, slashing taxes makes more money – not less – why, because if the tax rates are too high, people change their behaviour to avoid it, but when the tax rate is ‘acceptable’ – businesses and people simply pay it rather than avoid it.


Numerous islands; the Channel Islands, the Caribbean Islands, and Singapore as well as land locked countries like Switzerland have proved that changing laws to make their jurisdiction attractive to people and business is good for the economy and everyone living there.


Set out below are my top four suggestions of what a Government should do – post Brexit.


First; make sure that non doms are encouraged to bring their wealth into the UK rather than benefit from leaving it offshore, this could easily be done, with relatively few tweaks. It is a nonsense that we encourage rich people to live here, but to leave their wealth offshore.


Second, I would want to see the UK become a financial centre for trusts. The UK was the founder of trusts, but because they are now so heavily taxed there are very few in the UK, they are managed and resident in offshore financial centres – not the UK. This is business which belongs in the UK, but we would need to upgrade our trust laws to make the UK attractive. The UK, has fallen woefully behind the nippy offshore financial centres in trust laws. All that Britain would need to do would be to decide which were the best laws and simply follow them. Of course, my own legislation in the Bahamas – the Executive Entity Act would be the at the top of my wish list for new trust laws in the UK!


Third, I would want to see Stamp Duty on homes slashed. Of course, I have sympathy with the fact that people working in London, cannot afford to live here, but piling on the taxes; ATED, stamp duty, capital gains tax and inheritance tax, simply dries up of the market at the upper end, signalling that the UK does not want to attract rich foreigners to live here. With a buoyant upper end to the property market, which is now totally stagnant, the country would see a resurgence of all businesses which depend on market movement; estate agents, architects, interior designers, plumbers, electricians, decorators, and numerous other industries. What people want who work in London is not a price fall on mansions they could not afford to maintain but new affordable homes, where they can work as well as live.


Fourth, I would slash inheritance tax. Forty percent tax on your estate on death is a penalty for saving which cannot be good when the population is aging and everyone should be encouraged to save for their old age, not squander it – probably abroad so as to avoid having too much to pay to HMRC. Tax on death is a penalty on saving, this message needs to be made, loud and clear.


This is my top four – but I have plenty more suggestions if anyone is listening! If you agree or disagree – I would be delighted to hear from you.




Garnham has written two books ‘When you are Super Rich who can you Trust?’ and ‘How to win business from Private Clients’ which can be bought on Amazon or direct from, and if you want to contact her for an appointment call 020 3740 7422 or e mail on

Break down of trust

In my Book ‘When you are Super Rich who can you Trust?’ I make the point that if wealthy families fail to keep a check on their wealth it will sooner or later be eroded. From my experience, this tends to happen once the Settlor or wealth creator is incapacitated or dies and the erosion can come from a variety of sources.


Jeffrey (not his real name) is the brother in law of an oil baron Robert. He was close to his sister Margaret and their three children. Jeffrey was much younger than Margaret and she was Roberts second and much younger wife who he adored. Unexpectedly, Margaret contracted a rare form of cancer and after a short illness died. Jeffrey was distraught. He lost the will to live and he also died quite soon thereafter.


Robert had appointed Jeffrey, as the Protector of his trust, which held his many millions. As a Protector, he was given wide powers to appoint and remove beneficiaries. On the death of both Robert and Margaret, Jeffrey asked to see all the trust papers. He duly noted that he had unlimited power to remove the settlor’s children and grandchildren and appoint whoever he liked in their place. In the absence of a clause which said he could not appoint himself, he appointed himself as the sole beneficiary and removed all his nephews and neices. I was brought in my Robert’s eldest daughter, who was surprised that her maintenance payments had ceased.


For the trust buffs among you, it was likely that Jeffrey’s appointment was ‘personal’l. He therefore did not have to exercise his powers for the benefit of his nieces and nephews! If his appointment had been ‘professional’, his appointment would have been ‘fiduciary’ which means he could only exercise his powers in the best interests of his nephews and nieces.  


We called a meeting with Jeffrey and the beneficiaries he had removed and Jeffrey was persuaded to reinstate them as beneficiaries and the trustees were told to continue to pay the maintenance payments – they were lucky! They are still arguing about their entitlement to capital.


In another case, the Settlor, Rufus (not his real name), became incapacitated and was unable to keep in touch with the trustees of his trust, who were aware of his incapacity. His wife Josie approached me, to say that she had been in touch with the trustees, who were refusing to answer her calls or speak to her. Josie showed me a copy of the trust deed. It was clear that on her husband’s death, she and her children would be the beneficiaries, but not until then.  There was no clause stipulating what should happen if the Settlor became incapacitated.


On behalf of Josie we were able to obtain a copy of the trust accounts and documents. Since the incapacity of her husband Rufus, the Trustees had exercised their powers to increase their remuneration. By the time we got involved their fee had gone up from £50,000, to well over £200,000 in just four years. We agreed to indemnify them in exchange for their immediate resignation and we set up a structure for Josie which avoided this from happening again.


The third case, involved a Trustee who had complete control over the financial activities of the trust. Following the death of the Settlor, Serge, his widow Sally, came to see me, she was very concerned. Although her monthly allowance had continued to be paid since the death of Serge, the Trustees were not responding to her request for trust accounts.


Once again, we got involved and were able to obtain trust accounts. When we sat down with Sally and the accounts, it soon became clear that the Trustees had sold several properties at what would appear to be at an undervalue. We made some enquiries. The sales had been made to a company owned by the trustee company which had then sold on the properties at a 50% mark up.


In this case, we told the trustees that we would report them to their local ombudsman to have their license removed – which would put them out of business, if they did not account to the trust for the monies they made on the onward sale, which they did.


In my book, I offer some advice as to what wealthy families should do to avoid being ripped off. The first and most obvious tip is do not put too much trust in just one person – at all levels there must be checks and balances, which I call good governance.


If you would like to buy my book ‘When you are Super Rich who can you Trust?’ or ‘How to win business from Private Clients,’ go to my website or Amazon, or if you would like a meeting to discuss your concerns please contact me on or call 020 3740 7422

Beggars belief

A few weeks ago, I attended a panel session on how to pick a trustee. There were a range of leading experts on the podium supporting a variety of opinions. Luckily, I was not among them, because one comment from a leading lawyer in a well-known offshore financial centre made my blood boil!


‘Let’s face it,’ he said, ‘we make a lot more money out of our clients if they use professional trustees’.


How true, but how wrong.


To explain I will tell you the story of Frank (name and details have been changed to protect the family).


Frank set up a trust and transferred to his trustees his pharmaceutical business. In due course, he died and two of his three sons, became directors and turned it from a successful business to a well-known brand. The trust was administered in Hong Kong, by professional trustees.


The third of Frank’s sons, Martin, was not involved with the business. He married a beautiful and immensely rich woman, Margy. Martin and Margy lived a glamorous lifestyle in Monaco – that is, until Margy took up tennis.


With the children grown up, while Martin ran their family office, Margy played tennis and, fell in love with her tennis partner, a handsome widower. When, this came to light Martin was furious. In due course, Margy and Martin separated, and Margy sacked Martin from running her family office and chucked him out of their sumptuous apartment.


Angry and bitter, Martin turned to his brothers. They were each living comfortable lifestyles in houses with swimming pools and fancy cars, whereas he saw himself as having been badly treated and impoverished.


Martin angrily approached the trustee, to insist that as shareholder, it had a duty to all three siblings and should therefore dispute the directors’ remuneration and insist the company pay a better dividend to the trust.


On receipt of Martin’s demands the professional trustee panicked. Martin could sue it, for dereliction of its fiduciary duty of care to look after the interests of all three beneficiaries. It sought a legal opinion. However, the lawyers were unable to opine, without sight of the company accounts going back five years, a thorough research of the pharmaceutical sector and a review of comparable businesses.


This initial work took two months and the legal bill for the trust was $150,000. However, the report failed to make any recommendations as to how the dispute could be resolved, it was a statement of the facts and a list of what other directors in similar businesses were earning – some higher some lower.  


Martin’s reaction was that the report was evidence of fraud with the collusion of the Trustee. His brothers, he was convinced, were using their powers as Directors, to ‘milk’ the company, depriving the shareholder and him of a dividend.


On the other hand, his brothers saw the report as justification for their hard work and success, to which Martin had not contributed.


In month three, both Martin and his brothers had engaged their own lawyers, which delivered to the Trustee their legal bills, of $100,000 each!


Over the next three years, the dispute cost the Trust a fortune. But it was also a distraction. Martin’s brothers were unable to concentrate on running the business and the profits fell by 30%.


Martin saw the fall in profits, as further proof that his brothers were deliberately running down the business to reduce its value, to pay him less!


With falling profits however, Martin’s brothers were reluctant to saddle the company with debt. However, they also realized that until the dispute was resolved they could not focus on the business to bring its profits back up. Each side became more and more bitter and the arguments became increasingly personal.


After three years, and much distress and anger, the brothers finally decided to mediate. By this stage Martin and his brothers could not bear to be in the same room. Each arrived at the hotel where the mediation was to be held, by separate entrances and occupied separate rooms on separate floors.


The mediation lasted three days, but eventually both sides were sufficiently worn down to agree a settlement – which neither side was happy with. The final figure paid to Martin could have been more if they had mediated from the start and not incurred three years of professional fees.


Sadly, Martin’s situation is not unusual. As I say in my book, ‘When you are Super Rich who can you Trust?’ no-one can avoid concerns and miss-understandings from arising, but how they are resolved can make the difference between an irritating concern, or the creation of a catastrophe.


If you would like to find out how to structure your trust to deal with disputes, should they ever rise, please contact me on 020 3740 7422, or e mail me on Furthermore, if you would like to buy my books ‘When you are Super Rich who can you Trust?’ or ‘How to win business from Private Clients’ go to my website or buy them direct from Amazon.

The Vultures are Circling

In the Labour manifesto, two years ago, McDonnell together with Corbyn, proposed to introduce a 50% top rate of income tax; up 5%, on net income above £123,000 and 40% on net income above £80,000, to howls of protest.


Only a few years later, now, Hammond and Gove have come around to the Labour way of thinking. Michael Gove talks of British capitalism being ‘rigged’ in favour of elites, and Philip Hammond, is on record as saying that the economy needs ‘higher taxes to provide services to a greying, weakening population’.


So, it looks we are set for higher tax rates whatever the colour in Government next – what does it matter?


From 1932 to 1980- the average top rate of tax was 81%. Under Ted Heath’s government in the 1970’s, it was 75% with a 15% surcharge. Even under Margaret Thatcher it was a 60% top rate, until the last two years of her reign. So why is there such alarm now?


Because we are not used to anything other than low tax rates!


But do you really think, before Lady Thatcher slashed the top rate of tax, high tax payers, simply sat back quietly and paid it?  Remember this was not a time at which you could squirrel your money outside the UK. Until 1979, exchange controls were in place – so what you made in the UK, stayed in the UK.


Many wealthy families during this time, left the UK, to live in Switzerland or Monaco. With the prospect of higher rates of taxation, we are seeing the same thing again. An unprecedented number of families are looking for a bolt hole abroad in case tax rates rise again too high. Monaco and Switzerland are again the favourites, but with the exponential explosion of communication and travel since the 1970s, many are looking further afield; Dubai, Singapore, Bahamas or wherever convenient for family and business reasons


Those who could not move looked for other ways.


Post 1979, non- doms set up trusts offshore (not least as a result of my articles in the weekend FT on the benefits of offshore tax planning for non-doms). These trusts, however, are now vulnerable to attack since the introduction of the automatic exchange of information and the requirement to correct.


Of the 92,000 non doms currently living in this country most have set up offshore structures decades ago with little supervision or monitoring, since. They were out of sight and mind, but with pressure now mounting on offshore financial institutions– these structures are under scrutiny and should be reviewed by an independent professional before HMRC gets a look in.


All trusts now need to be independently reviewed to ensure they are as robust and tax efficient as they could be.


But if you are UK dom and do not wish to leave the country, what can you do?  Ask whether you are employed or could be self-employed? The self-employed can make arrangements to pay less tax.


You are employed if you work for one person or company, and that person calls the shots as to what you do, the days you work and the hours. However, if you call the shots and are or could work for several companies or businesses, it may be possible that you could be self-employed.


If so, you should consider setting up a limited company in the UK, to which you subcontract your services – why? Because, companies pay 19% tax, whereas, if you were employed or self-employed in your own name, you would pay a maximum of 45%.


Kate is a business consultant. She used to work for a large agency, until her major client asked her to leave and work for it. Rather than work in-house, she negotiated a free-lance contract which meant she was free to work for other clients as well, which she did.


To begin with Kate earned £320,000 a year. However, she now no-longer receives this income, her company TTC Limited is the recipient, and it pays taxes at only 19% rather than Kate’s top rate of tax at 45%.


In setting up the company, Kate loaned it £600,000, so for the first two years, the company was repaying her loan so she paid no extra personal tax.


Kate’s business requires her to travel abroad on business marketing trips. The travel and accommodation is paid for her by TGC Limited which is deducted against its profits so the expenses are tax free. However, expenses on client entertaining, dinners and drinks, are not deductible, but nevertheless Kate has a company credit card and the company pays the bills.


However, although the expenses are not tax deductible for the company, they are still business expenses, and are not treated as a benefit in kind from the company to Kate. This means that she is not taxed at her tax rate of 45% on the client entertaining expenses incurred by her company TCC Limited.


Because TCC Limited does not get a deduction for entertaining clients, Kate prefers to get to know her clients through client workshops and educational presentations, with drinks and canapes thereafter. The cost of running these workshops and training programs are wholly tax deductible by her company, including the food and drink.


Given the huge discrepancy in tax rates between the corporation tax rate and the higher personal tax rate it is hardly surprising that this form of tax planning has started to attract a lot more interest in recent months.


If you would like to know more about getting a review of your trust offshore or how to plan, using traditional tax planning methods, contact me at or phone on 020 3740 7422 or 07979 188 288. Also, if you would like to buy my book, ‘When you are Super Rich Who can you Trust?’ please buy from Amazon or contact me direct.