Everyone loves tax still applies to you then you don't like tax, you think it's rude.

Tax don't rich till they go Gripping many countries Damage to wit.

So let's all set and discuss this trip not swear it's just corruption.

You'd be mad not to do the same.

Welcome to Business Without.

My name is Andy Ori, the rebel accounter.

And I'm joined by the lovely lawyer Gemma Hotter.

Hi, Andy.

Now I'm an accountant, Gemma's a lawyer.

Great to have two professionals you don't have to pay for.

And we just want to deal with certain subjects.

So I wrote a song called Can't Tax this and you can check it out.

It's a cover of Can't Touch this and it's all about tax havens, about if you tax a country too heavily in a country, then maybe it goes offshore.

And effectively there are all these international places, a lot of them, the Caribbean and others, a lot of them are British, where they have very low tax.

But we also need to understand that these places survive on that and we'd have to think about what to do with our economies otherwise.

But I wrote a fun song about this.

We had a wonderful interview with Tom Dugdale, who's a lawyer who practices and sets up international funds, so uses tax havens for very legitimate reasons that will be coming out on Wednesday 29th of July.

And I said, before we do that, I think there's a simpler question that we need to answer, which is, first of all, this seems to be quite a deep misconception amongst the public, which is driving a lot of this anger against rich people.

And indeed, I had this conversation with Gary Stevenson when he said, you're saying that British rich people aren't just sticking it all offshore and not paying tax.

And I said, no, I can't do that.

You haven't been able to do that since the 70s.

In.

So, in short, if I had to summarize, in short, someone will come along to me as a business sometimes and say, should I be using a tax haven?

And also this misconception in the public that the rich all using tax havens, that's why they're not paying tax, and that's not fair because we can't access that.

That and I.

The short answer for you, we're going to deal with this a little bit better in a little bit is that it isn't really something that is very useful to anyone anymore.

There are occasional very specific use cases where a tax haven or an offshore situation could make sense.

For a business or an individual, but they're very unusual.

It's incredibly hard to do it these days.

But I thought we, we wanted to start with the myth.

Where does this myth come from?

And Gemma, you had some thoughts?

Yeah.

So I think Tom explains to us originally, tax havens came about because they were these, these places post World War II where there was no firstly post World War II in the UK and many of the other countries that were involved in the war, taxes just went so, so high during the war.

They were.

They pay for the war.

Exactly.

So this is sort of earnings above 200 grand, things like that.

They were between sort of 90 and 102%.

Incredibly high.

Yeah.

So I have to say, when taxes do get to that level, people are undoubtedly, I think, going to try and find ways.

They start to fiddle.

There's no fiddle.

They try to get out of.

Do you not believe it's morally right?

And they.

Because they're working so hard and then all of that money is just going to, to the government, right.

And just going to hmc, hmrc.

So they'll try to get out of it.

That's when.

So tax havens effectively are the.

Usually these islands where there's pretty much zero or very low tax.

Right.

So what they were doing is they would be putting all of their money offshore or investing offshore in these places where there is really low tax in companies in those places.

And then the dividends would ultimately usually go to a Swiss bank account.

And back then, Switzerland had this law where it was actually a criminal offense to disclose anything that was in a Swiss bank account.

So a Swiss bank account was pretty much like the gold standard for, for privacy.

If you wanted privacy, you had a Swiss bank account.

Everyone back in the day, like in the 70s and the 80s, they, all these wealthy people did have Swiss bank accounts and that was where everything went.

And it was a way of hiding everything.

So it got this reputation of being a way of evading tax.

Because were you hiding it for legitimate reasons or were you hiding it to avoid the tax authorities knowing about it and therefore not being able to tax it?

And I think that's why tax haven's.

Got this bad rep. And like any behavior, it takes the law a while to keep up, to catch up.

So people started doing this.

There were all sorts of ways.

There were the Swiss bag men who used to fly in, and if you were a butcher, a baker, a candlestick maker, they'd come along on a Friday, take your cash.

The cash economy was huge back then, the black cash economy.

And this illustrates this very very simple point is the more you tax something, the less you get of it because people change their behavior and if it gets very punitive people will find ways around it.

Leave countries, they just get to this point, they can't really move forward.

I always use the example of this firm.

My grandfather started this firm he only built a very small practice.

Then my dad took over and built it much larger and I always wondered, I always thought oh grandpa just wasn't ambitious, a bit of a lazy guy or that's unfair to him or whatever.

And it was just a simple point my dad made to me years ago is like no, the tax rates were so high, there was no point.

People didn't bother building businesses.

So these things have effects.

Either you slow down what you're doing and as you say the tax rates are so hard fiddling getting around the system was just part of life.

But then the laws came in and they started coming in hard.

Yeah.

So there were like all of these different layers of the reasons why the laws started changing.

Right.

So there were these schemes often these schemes using offshore structures were a set up often by tax advisors and accountants actually in the UK and they would recommend using these offshore.

It was lawful back then, it was.

Lawful and they were using law lawful schemes.

So one that I can give as an example it was known as K2 scheme and the reason I raise it is because actually lots of celebrities were using it.

So what they were doing was they were setting up these companies offshore.

They were getting employed by these offshore companies but getting paid these really low salaries.

All of the money that they were earning was going into these companies.

They were getting these really low salaries through these companies.

But basically the companies, the offshore companies were lending them like high loans and that was what they were living off Ultimately they were never going to pay back these loans because they owned these companies, they weren't going to pay them back.

This was all lawful but it was a way that they weren't paying any tax on the income that they were receiving.

So that one was known as K2 Jimmy Carr was a part of it.

So after that one happened.

These are more recent.

Yeah, that that was a recent trick that was only attacked there was have something offshore There were these umbrella companies and that to me that these days and they only introduced gar I'd have to look up but it was in my career general anti avoidance rules that start to say A scheme of arrangements from the main or one of the main purp purposes, avoiding taxes, illegal tax evasion.

I think there's a very simple illustrative point here too that they talked in the press this morning that one of the ways they're going to pay for all this stuff that they need to is to go after tax avoidance.

Going off a.

They're pretty good at it now and the stuff that's left is pretty minor.

And we are heavily regulated as professionals.

We can't go near anything that.

There are probably some more nefarious type accountants and the lawyers, but we are heavily regulated.

We cannot allow our clients to do anything that isn't right.

You can do some planning, you can do some thinking, but you can't stick it offshore, do anything crazy.

Or you write it down on a piece of paper that they're loaning it and getting it back and you're like, what the hell is this?

This is general anti avoidance.

Clear anti avoidance.

And we can't be involved in that.

If you want to lower tax avoidance, there's a very simple things.

Lower tax because people don't avoid anything.

You take countries like Hong Kong or Singapore where the tax rates are really low.

Nobody fiddles, nobody does anything clever.

There's no point, everyone's happy to pay 10, 20% and they're not bothered and you get.

The whole industry disappears.

Professional service industry shrin.

And all of this has many impacts.

But if they want, if they're worried about tax avoidance, just make sure they're not too punitive, which is the whole concept of the Laffra curve.

And obviously if you're collecting zero, you're collecting zero.

But as that ratchets it up.

So that's an interesting one.

The sort of the Jimmy Carr.

This is probably the two.

The naughties, is it?

Yeah.

So then we had Naughty, naughty.

So we had got.

We had.

So the US introduced fatca, which is.

Disclosure of Overseas Bank Accounts.

Yeah, exactly.

So the US basically requires foreign financial institutions to identify any US persons and report information about their accounts to the us.

Anyone who doesn't do that isn't allowed to basically use US financial markets.

And it shifted for us with the anti money laundering laws, the bri, the.

Bribery act, the Common Reporting standards as well.

So basically now all countries within the OECD have to report.

So say if Jersey has got a trust, they have to report it back to the UK and to hmrc.

So you really can't get around it in the way that you used to.

Be able to intentionally not legally.

Secrecy.

No, not legally, no.

And that is the key point.

You can always commit a crime and we can't, we basically can't legislate for criminals.

That's the whole point.

No, but most of these things, most of these say offshore companies or offshore trusts, they usually set up or advised on by professionals and those professionals have got regulatory requirements as well.

So we are not going to recommend something like that because we're.

I'm going to get struck up, explain.

How strong it is as a concept that they changed and this happened again in my career.

They said that accounts and lawyers must know what's going on.

If they're aware of it, they will go to prison with the person caught.

And they.

And there's no plausible deniability.

It's.

If you're their accountant, you can't say, I didn't know.

If you get any whiff of it, then you have.

We have to write reports, we have to make disclosures and let it be a warning to you when you deal with professionals, if you, if they, if you are saying something that is illegal to them, then we have to go fill in a report, basically.

So that is a huge shift.

We became sort of the police.

But I think underneath it, I think that the rules are always so complicated.

We're here to help people.

I don't think anybody's.

Yeah, I'm sure there are.

I feel like I should also add a lot of these.

So when the Panama Papers were leaked, for example, there was this huge thing about, oh, David Cameron's got a trust and X has got.

Everyone had these offshore trusts.

Yeah, but they weren't necessarily.

They were all league.

Well, they could be as long as they were paying tax.

Right?

Yes.

So you can have, you can still have an offshore trust or an offshore company, as long as you are reporting it correctly and paying the tax on it, that's okay.

So it just won't necessarily be tax.

Efficient or it might be, but as long as you are paying the correct.

So, for example, the thing that Tom was explaining to us is that a lot of these offshore companies are set up for tax neutrality because you will have investment funds with people investing from all over the world into these investment.

Well, maybe we, Maybe if we're ready to.

We can talk about why would you use it?

When would I use.

Client will say to me, quite understandably, should I have an offshore holding company?

Should I do that?

And without getting completely lost in the detail of a lot of laws of which there are movement of assets aboard control foreign companies.

Let's say there's quite a few laws that would question whether or not it all comes down to the concepts of substance.

So substance in tax means where is the real activity?

Where are the people, where are the decisions being made?

Where is the ip, where is the value?

So can I go and set up a U A A holding company in Jersey or BVI that's going to own my company in the UK and I can feed money up to that and therefore get it out of tax?

The truthful answer is, unless you have a very strong commercial reason and there's going to be genuine offshore substance to what you're doing, no, it's not going to be worth your while if the business is a British business with people in it in Britain doing stuff or the United Kingdom.

Let's not forget our friends in Northern Ireland, if you're in the UK and that's what you're doing, whatever you do, it's going to be taxed here because the decision making is here, the people's here, the substance is here.

You can't just say, oh, I've got this entity over there and I stream money to it.

If you go to the beginning of setting up a business, if you said, I'm going to start a new business today, Movement assets Abroad legislation basically says if you take £10,000 that you've made in the UK and you go and put it in a tax haven to set a business up again, the UK has a sort of lean on that in terms of the legal word to say that's a British asset you've effectively used to generate money.

You can't take it.

Now, where could I see real use a question?

What about, say, influencers, who are they do everything online, they do everything through their social media, maybe they're traveling all around the world as part of this.

Could.

Would they have a reason to have an offshore company and have all everything go through that offshore company to not pay tax?

Would that make sense?

It's all about where they are, how much they're moving, if they are genuinely not attached to any country, so not spending any particular time in any country.

Now, let's just remember the basic rules.

You are always taxable where you perform your activities.

So if I go work in France for five days, I am taxable there.

Then you have a treaty between these countries to say that if Andrew is a UK tax resident and Andrew therefore spends sufficient time in the uk, is a UK person, we have a treaty that says if it is a small amount of time, which can go as much as 183 days and it's not director's duties importantly, then we won't tax you and you won't tax us because it would be a nightmare.

Now, in your example, that relies on me belonging somewhere and paying tax somewhere.

If I don't belong anywhere, I cannot access these treaties.

So actually, wherever I am being an influencer, that activity is taxable in those countries.

Why it falls down is how the hell does everyone track it?

If I've spent.

If I'm an influencer and I live in 10 different countries and I'm.

I probably don't have a visa, I probably don't have the legal right to work, first of all, because I'm coming as a tourist.

Secondly, I'm a tourist, I'm not on the map.

I can move around Europe and no one's checking my passport.

I can move to all these places.

So you can get away with it, as in, the countries are struggling to keep up, but, boy, is the world changing fast.

And access to your mobile phone can tell someone an awful lot about your activity.

I think things are changing so much whether people are using crypto and that's traceable in terms of that.

All of the tax authorities just.

They're using information, they're using AI, so.

They'll be able to.

To find out all of this information much more than they could in the past.

And imagine you're entering a country now and they think, what's this person up to?

They keep coming in and out of this country.

They're British citizen, but I've looked up, they don't seem to be paying any tax in Britain.

Can I have your mobile phone, please?

And then they start, they do an analysis and they say, you're in all these countries now.

Countries at the moment are only worried about their country.

But I think you're back to.

It's a bit like.

We have moments in meetings, I'm sure, me and Gemma too, when someone says, how are they ever going to know, know?

And I always laugh when someone says that.

It's like, I know for starters.

So therefore that's a problem.

Yeah.

And secondly, that's the wrong attitude.

I don't want to work with someone whose attitude is what I can get away with.

But it's cultural.

I bump into different countries.

UK is very compliant.

We're very like, no, I want to do the right thing.

We're incredibly compliant on tax, really.

When you compare us to a lot of countries, that have much more of a culture of what can I get away with?

That.

I think that's the whole reason of why, like, the culture around tax havens has come around, or back in the day, because people were seeing how much they could get away with.

Yes.

How much?

So an influencer could definitely flout the system, but it would be illegal.

They would technically own tax in lots of different countries that they should be paying.

They could be smarter and use some of the nomad visas and play flat rates attacks where they bump into life and reality is, one day they want to buy a house and get a mortgage and they don't exist because where's their tax returns?

I used to know someone without getting lost in it, a stepfather of someone who was a.

A proper fraudster and move around Europe and seeing how much he could get away with.

Obviously I found it abhorrent, but it was none of my business.

It wasn't in my professional life.

We have professional duties while we're at work, but if I'm hanging out with someone socially, it's not my job to take them to the police.

But I was amazed because obviously he could move around Europe, no one knew where he was and he'd never paid tax in his life.

And I found that abhorrent.

I found it breathless.

I was like, how dare you use all these services and use all this stuff from a government and not pay anything into the system?

And I think that's how British people react.

Our culture is quite like that.

But can they get away with it?

Yes.

But at some point reality is going to bite because at some point someone's going to ask them, they're going to say, I want to borrow some money, I want to do X, I want to do Y.

So it might be fine in your 20s, but at some point you don't exist.

You have no history, you have no credit history that's worth talking about.

Can't get a mortgage, you can't get a bank.

Who are you?

Where are you from?

You only exist on your social media.

You only exist on your social media.

And I think you should.

I think this is where I'm with people.

You should feel immoral.

You.

And quite often these people are talking about.

All about the environment or organic or they're like, oh, I don't agree with animal death and I'm vegetarian and veganism or inequality.

And it's like, are you paying your taxes?

Because.

Shut the fuck up if you're not.

Because you're just virtue sick.

You're.

I don't Know what you call it?

It's.

It's.

You're a charlatan.

You're hypocrite.

You're a blooming hypocrite.

So I think it's a great example that someone moves around like that.

Now, now let's take what we mostly deal with, which is you've got a business here.

Should I use offshore?

When should I use offshore?

We did an episode with Jeremy talking about when should I use trust.

Okay.

So I had a commercial example.

We chatted about with Tom Dugdale where the business customers were all going to be coming internationally and a lot of them were going to be in very low tax locations.

So when you have a situation where you can commercially justify that, you would be not able to build this business unless you put it offshore in a place that these people are happy to go and trade and do business that doesn't.

If I then own that in the uk, whatever I get is going to be taxed here.

But you can definitely build a corporate structure.

If the customer base, it was necessary that your business couldn't exist.

And the hmrc, you can go through a quarry.

They would be quite happy to understand that all the control, foreign company rules and everything, they all have commercial exemptions.

They have exemptions if the country pays enough tax.

There's always this sort of ratio of what's the tax rate there.

They have exemptions in terms of when it's very minor and everything is brought back through dividends anyway.

But.

And you could have a business that you started from scratch.

Let's say you're British, the other person's based in Dubai, the other person lives in the bvi.

They invest the money and you provide services and you're building this offshore structure, this offshore technology company or something that is going to have customers.

And I think the regulatory is the other one.

Crypto has come along in this massive thing.

Obviously you have to find locations at times that you can trade in.

So you can find regulatory reasons where you want to go and do something that the they allow that in that country or that territory.

Now back to why are they allowing that?

Were they all crooks?

It's like, of course there's some islands that are less or some places that are not governed as well as others.

But they're all just trying to compete.

It's a way to incentivize those companies to actually come and work from those islands.

Because yeah, that's what all countries are trying to do.

Right.

100 They have nothing else.

Otherwise they have to.

I'm from the Canary Islands.

They have tourism over there.

They're actually not a tax haven.

Like they do charge charge tax.

Although.

Anyway, that's complicated.

But.

But the point is the only way to.

But they're a huge tourist spot.

They are the only place in Europe you can go in winter and it's warm.

They have a special economic rate of 4%, 4% corporation tax, whereas the rest of Spain is 25.

And the reason for that 4% corporation tax is to attract businesses to the Canary Island.

So it's exactly the same thing because.

Because, yeah, tourism goes there, but businesses don't go there.

Now the really good news, so if a client sits in front of me, should have a tax haven, whatever.

What do you think about it?

You say to them, you ask these commercial questions, why?

Because by the way, the moment you're using one of these territories, even the very well regulated ones, Jersey is incredibly well regulated.

Go and try and do something in Jersey.

You need letters from every lawyer around the world that this is legal, that this isn't some scheme, that this is an absolute legitimate purpose for what you're trying to do.

Why?

Jersey is revered in that regard.

It's the most strict of those.

But they're all a bit like that these days.

Not all, but a lot of them are a bit like that.

And the good news is you say to someone, okay, you go through the possible things and you say, look, your business is based in Britain, you've got a subsidiary in America and Australia and whatever.

No, this is a terrible idea.

And I'll tell you why.

First of all, we're going to be asking lots of questions.

Secondly, the tax man's going to be asking lots of questions.

Thirdly, your investors are going to ask lots of questions.

Fourthly, it is immoral now amongst a lot of people to say you'd be, why have you got it there?

Oh, it's to avoid tax or something.

It's like, okay, so we're going to not be legal from a UK point of view because we don't have a commercial.

So cross it all out.

But here's the great news.

UK holding companies are still one of the best holding companies in the world.

You can ask AI, it will tell you it's in the top 10.

The UK has amazing things about their holding companies.

If I was to summarize, global, where should I put my global holding company if I am building an international business?

This.

If it's American money, they all want Delaware Inks or Delaware C Corps.

And that is actually due to the Law.

The lawyers somewhat run America and they like the very commercial friendly law in America.

So if it's American money there, if it's money from Asia, Singapore is really the leading hub for setting up UK holding companies.

And then I'm very pleased to say, if it's in this part of the.

World, holding companies in Asia, Asia.

So not for setting up UK holding.

Company, you could pick any of these hubs.

It kind of depends where your money's coming from and where are you.

You've got to go to this place.

This has got to be a place you're going to be present.

You can't just say, oh, I'll have it in Singapore.

It's like, okay, you've got to run it in Singapore, it's a holding company.

Maybe the trading businesses are elsewhere, but you've still got to go and run and maintain that and have substance to that.

Now why do they pick.

And then Singapore is great and then UK is also fantastic.

You could mention, people, sometimes mention Netherlands or Ireland or Switzerland, but to be honest, be honest, I think the UK still wins on it.

And the reason you're looking for is you want somewhere that isn't a tax haven or a bit of a dodgy place, has large capital markets, so large investment, community, stability, good law, all of these things that I feel safest investor.

It feels good.

UK holding companies do not pay tax on dividends they receive.

So they can have subsidiaries all over the world making profits.

Maybe one's in a tax haven, trading with people there and the money comes up into the UK holding company, there is no tax tax on those dividends.

Secondly, when a dividend is distributed globally, most countries, including the Netherlands and Ireland and places have withholding taxes on those dividends.

So as the money leaves that country, they say, oh, we want to tax those dividends.

The UK does not have withholding taxes on dividends.

This is massive.

It means that the uk, you can have a holding company, you can have subsidiaries around the world, the profits can be drawn up and distributed.

The UK is not going to attach them.

Someone may say, why don't you touch them?

It's for the very reason we're talking about that it makes UK extremely attractive for a place to put your hq, your holding company, your central management and control your top bods and all of that.

Secondly, a UK company can sell any subsidiary it owns more than 10% of for more than a year, or if it's in a group, you don't have to worry about the year.

But more than 10% of and they can sell that tax free in the company.

Again, you should use UK holding companies if you're not already.

You can use them as family investment companies where you and your family take your shares.

You should use them within your structure.

If you are a business that is growing and you have a single limited company.

The best piece of advice I could give you right now is to get a holding company in place and there's a relief to do it or at least drop a subsidiary.

At least make sure you are a group, you are more than one company and that's because there is a one year time limit for you to be able to sell a subsidiary and get tax free, what's called substantial shareholding exemption if you are not a group.

So really important point, drop a subsidiary down today.

But the real point is you sit in kind of clients 100 times over and you say what are you trying to achieve?

And you talk through what they're trying to achieve and you say use the UK holding company.

Yeah.

If they're trying to achieve it for tax purposes and they're based here, it usually doesn't make any sense.

The one place where I can can see how it would make sense is if it's for privacy purposes.

If they don't want people to know that they own that company, that family investment company.

Say we do have a register of beneficial ownership.

So you can always see through if you have a UK company anywhere in the mix.

UK company, that's true.

I guess.

Not always.

You could, you could because it looks at more than 50% overseas is more than 50%.

More than 50%.

So if you have less than 50% you would just see that overseas.

So this is the thing with say Delaware companies like America, you can't find out who owns those companies.

It's not on a public register.

The same with all of the offshore with Jersey companies, with Guernsey, you can't find out who owns those companies.

Yeah, I think if you have an overseas investor or someone who's going to put the money up to start with, that changes the conversation.

Where are they based?

That's, that's.

Oh, that's interesting.

They're coming out of Dubai or Hong Kong or somewhere, they want to start a business, then there could be an argument that you look at somewhere else.

Singapore is more attractive arguably for tax, Hong Kong maybe for tax than the uk.

So you could hold if the initial investment is to develop intellectual property or something, perhaps you do something there.

But these are still not really tax havens, they're just very low tax Very stable environments and God, if we wanted to look at a model of what the UK could do do, Singapore would be incredible on many levels.

And I think that's a bit of an anathema to people.

But they've taken the British system and they've run with it and absolutely completely smashing it.

Hope anti Vernon's listening to this, please.

But I think that's the point.

I think UK holding companies.

UK companies are still great entities, aren't they?

So if you had an international investor.

If you are doing something and you need a regulatory environment that suits what you're doing better.

Your example.

Sorry, which was privacy.

Privacy.

Which is a really interesting one if you're looking for privacy is very hard to get now in the UK because the UK will always try and see through the appeal.

Companies above and may.

People may say why does anyone deserve privacy?

Sometimes people do.

You could think of very commercial reasons.

Sometimes someone may be very famous.

Yeah.

Not want to know people.

They're involved in an industry.

Yeah.

This is only privacy from public eyes.

Like all of this information is still available to the government and to HMRC tax authorities.

Right.

But some people won't want just the general public to know what they own.

You can think of all sorts of examples that maybe are distasteful to people.

But you might have the old form of trust, isn't it?

I might have a child that I don't want everyone to know about necessarily.

I might.

At least we could probably think of some better examples.

But sometimes in life privacy is important.

It doesn't mean you're doing anything wrong.

It's a weird thing.

We have this.

We.

We have this weird relationship with money in the uk.

I was thinking about it the other day.

We're very quiet about money.

We don't want people to know how wealthy we are.

And yet on the flip side you get people wearing.

Going out and spending loads of money at restaurants and buying all these designer clothes where they're showing off about money.

We have this very.

We could probably do option B a bit more.

Although it's distasteful to us.

But I thought you were going to say the interesting thing that we're very private about money but we're very transparent here.

Oh, I don't think I. Yeah.

You mean companies.

True.

Company's house.

And we want to know.

And we do the rich list and we want to be nosy.

People are nosy.

Oh yeah.

There's super.

Where you can find out what people's houses are worth and you can go on to Companies house and see Google.

Whenever I type in someone's name it was the, the top search is always like how much are they worth?

I usually get companies that they're directors of.

Oh no.

But when you, you type Tom Cruise Network sometimes you're just looking up someone minor and they're like, and they're like network.

And sometimes I click it and it's.

We estimate the network it's like what the is anyway.

Yeah.

So the great news for you if, whether you're, if you're in the UK you've already got a great company structure just I would advise you to be a group if you are not already lots of companies has problems, you get associates and stuff but definitely don't be a single entity.

The very vanilla structure for you is you have a holding company which you try and keep your intellectual property in, you try and keep the brand in and then you have a trading company below it and that is on the basis that if the trading company had difficulty you would still own your brand effectively.

Imagine you got sued or something bad happened.

And the vanilla structure you have holding company, UK Trade Co and then rest of the world you have an American company, whatever.

That's the classic UK structure.

If you really wanted to be smart too and you weren't EIs, you weren't looking for raising investment, you weren't using EMI which is a or share option schemes and you were much more an owner managed business where you own your company then you want to think about a family investment company so you have have trade co Holdco and then you have family investment company above it and that family investment company you could put you, your wife, you could even possibly do your kids although kids, any money they receive before they're 18 will be taxable on you.

But effectively as a family you can have a holding for your shares.

These things are really interesting to do.

If you're already trading, you can't necessarily do them all without facing some tax consequences but have a chat to your accountant, have a chat to your advisor about doing that.

That and if as long as you are two companies then you get this substantial shareholding exemption which for various reasons can be very helpful over time.

If you come to sell a piece of your business or all of your business, it enables you to be able to drop subsidiaries, put assets in it and sell that and within the company structure not pay tax.

If you're from overseas or you're thinking I'm building an international group, where is the best place for me to have my holding company?

The American Investors will usually dictate Delaware, but they don't mind the uk.

If your money is.

And your business is more Asia based, then Singapore is really the prime hub for building holding companies.

That is a very nice, simple vanilla structure for you to say, okay, great.

And the UK is very good internationally.

The UK has the largest tax treaty network in the world.

So if you are very international business and you want to raise investment very globally, I think it is an extremely strong case to say, people will say, what about Ireland?

Ireland, because it has this 12 and a half percent corporation tax rate that Europe's a bit uncomfortable with, it has huge substance requirements.

So yes, you can do that, but you've got to put all your staff in Ireland, the uk, Interestingly, you can have a holding company with sort of key management coming here, running the business from here.

And that will work as a concept, I. E. Substance is important, but we will look at purely at it being a holding company.

I hope that was really some help.

Can I just quickly go on to just one thing?

We've spoken about companies and offshore companies.

Can I just quickly talk about traffic trusts?

Let's talk about it.

Just because that has recently changed a lot.

Do we have time?

Yeah, just because that has recently changed a lot as well.

And I know we did a full episode on this with Jeremy, so I'm not going to go into huge detail on it, but we used to advise a lot of our international clients before they came or before they became deemed domiciled in the UK to consider setting up a trust offshore and placing their placing funds into that offshore trust.

So a foreigner coming into the UK system, they're not British.

Before everyone gets upset, they can.

Could slightly leave stuff at the door.

Yeah, they could leave, exactly.

So it was otherwise once they became.

Became deemed domiciled in the uk, everything that they owned would become subject to UK inheritance tax.

And we've got a really high rate of inheritance tax at 40%.

And inheritance tax is actually unusual globally.

A lot of people come from countries with no inheritance tax or death taxes.

So they scare people.

Yeah.

So for a lot of those people, we would say put those funds into an offshore trust.

It was known as an excluded property trust.

And then even when they became deemed domiciled in the uk, we wouldn't tax what, whatever was in that exclusion.

As long as they weren't British, you'd only put non British assets.

So as long as they would say.

You're from India and you're.

You own houses in Australia, India and France, you could bundle those up into a trust and enter the UK tax system and we would leave that alone.

And then over 15 years, years it used to be, you would, in our tax system effectively become fully taxable and British.

So we will get our claws into you over a period of 15 years and say, ha, you've been too long here.

But they could have left those assets outside of their stuff so that we.

Wouldn't have charged our 40 inheritance tax on those assets.

And really the idea around it, I think it was put in place by a Labor government, was because otherwise those international people were not going to come to the uk if all of a sudden, a sudden all of their assets were going to become subject to this really punitive 40 inheritance tax, which they wouldn't have been taxed on back in Australia or back in India as the excluded property.

That's gone.

Yeah.

And if you set up an excluded property trust, bad news for you.

It's all taxable now.

Yeah.

But.

But effectively now, if you set up one of those trusts, say you've not been in the UK yet for too long, you set up one of these trusts and then you come to the UK and you're here for 10 out of 20 years, you become known as long term resident and then anything that you've got in those trusts still becomes subject to UK inheritance.

After you've lived here 10 years.

After you've lived here for 10 years.

Now, if you leave and you're out of the UK for enough time, there's.

A tail that goes between three to 10 years, depending how long you live here.

Exactly.

So between 10 and 20 years you have it.

Imagine how off putting this is for people.

Again, people who don't understand how mobile these people are, how we live in a very global world that you're being told that you enter a system and then you hit 10 years and now we'll tax you globally on everything you have and maybe you've got some family assets or something which are attached to you.

It's very daunting for people.

People.

And ultimately you would rather these people stay here, build businesses, invest their lives.

I just think they're not sitting here counting their money, most of these people.

And if they're buying services, employing people, that's a good thing.

Yeah.

So it's like a really interesting point that they got rid of that regime of excluded property trusts, because I think what it means is that more people will maybe come to The UK for a shorter amount of time.

Yeah.

You can come for four years now and it's very generous, isn't it?

Very generous.

Yep.

Because you get no, no UK income tax or capital gains tax on your foreign income and gains and you can.

Bring it into the country.

So four years, fantastic.

And then the moment that ends, we will tax you on everything other inheritance tax, death taxes and then once you've been here for 10 years, death taxes.

Yes.

Although you can leave and then there's a tail.

So if you've say been here for 10 years and you leave for three years, you'll no longer become be subject to UK inheritance tax on everything, anything just what you own in the uk.

Yeah.

You can't run back that quickly.

You've got to then anyway, sorry, that.

Was just another example of where we.

When would you use offshore and.

Yeah, and you can't anymore.

We used to use offshore trusts for that reason, but it just doesn't work in the same way anymore.

And it has had a big impact on people who've stayed and gone and maybe people think good riddance, that's up to you really.

But I think generally speaking, I know we're anti rich and anti immigrants, but rich immigrants.

Immigrants are generally quite helpful people to have knocking around.

One thing it does though is push up property prices, particularly in London.

So it cools the London property market stamped.

You see land tax than others do they?

Yeah.

So if they've already got another home elsewhere, they pay more stuff anywhere in the world tax.

Anywhere else in the world.

Yeah.

And if they buy when they are overseas, they pay more inheritance tax as well.

Yeah, but there's definitely land tax.

Sorry.

Yeah, but they've definitely be a cooling of the London market and that is a lot to do with this.

And you actually see it in the hospitality sector.

If you ask people in hospitality, they're struggling for lots of reasons, but there are less customers.

And I think unfortunately those very wealthy people, they eat out lunch, breakfast, dinner, they eat out all the time.

So there was a huge sort of drop in that because you don't.

You only need sort of 20% of them to leave who are having lunch, breakfast, dinner, barely cook and they always eating out and stuff.

That's a lot for the hospitality scene anyway.

In essence there are very few circumstances where you can do anything offshore anymore that is worth doing.

But the good news is the UK certain corporate tax system is not a bad thing.

Not a bad thing, certainly clampair globally.

And if they screw that up, I'm packing my bags.

We may as well give up at that point.

So they really.

I think if they.

They're talking about increasing capital gains tax on individuals.

Again, using UK companies to help build businesses.

Remember, this is money in the business.

If you take it out of the business, it's always taxed.

But you can build money within businesses and that's not so bad bad.

So there we go.

Thanks, Andy.

Thanks.

So that was a little update.

Check out tax haven.

I'm sorry?

Check out Can't Tax this, which is a song and sort of fun version of trying to discuss this point.

But this episode has really just been able to just try and teach you a little bit about that worrying feeling, that nagging FOMO of shouldn't I put it all offshore and then I won't have to pay any tax and it'll be brilliant.

And yeah, I would say not.

But the good news is maybe it's not so bad what you've already got got.

Please join us again soon.

We have an episode coming out with Tom Dugdale in about a week's time on 29 July, which is talking about how tax havens are really used in the global.

There's a plumbing of the financial system, which is a really fascinating episode.

So thanks to Tom.

Thank you, Gemma.

Thanks so much, Andy.

Take care.

Everyone loves tax.

Still applies to you, then.

You don't like tax, you think it's rude Tax don't rich till they go grip in many countries.

Damage, to wit.

So let's all sit and discuss this trip.

Not swear it's just corruption.

You'd be mad not to do the same pay.

Let's.