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1260288.  Wed Nov 08, 2017 4:24 am Reply with quote

suze wrote:
It was reported that there was no inheritance tax to be paid when Gerald passed the bulk of his estate - probate value £8.3 billion - to Hugh. Precisely how that was achieved is a question for the Westminsters' lawyers and they won't tell the likes of you and me, but "shitloads of complicated trusts" is the gist of it.

Back in 2006 the law was changed so that (new) trusts are subject to Inheritance Tax, but because the trusts themselves can't die the charge is periodic, rather than payable on anyone's death. Such trusts pay Inheritance Tax at somewhere around 5% of their assets every 10 years. Probably less than would be payable without the trust structure, but not nothing.

1260482.  Wed Nov 08, 2017 12:27 pm Reply with quote

barbados wrote:
As for the will situation, with a threshold of £425,000 (+ another potential sum upto £325,000 depending on how the spouses will was arranged) £8,000 is an awful lot of money for a solicitor to charge you to do work that could be done with without the need for a solicitor, which is where the careful wording comes in.

I tend to agree that it is rather a lot for work which - barring the unforeseen - will be purely administrative, but 1.8% of the value of the estate is apparently the conventional amount to charge for this particular job.

I am not an executor and so it's not really my business, but I have put it to Andy and his sister - who are the executors - that the job could be done considerably cheaper.

In fact, they can do quite a lot of the legwork themselves. You don't need to be a solicitor to prepare lists of the various investments, or to write to the relevant organizations advising them of the death.

If they do go for that DIY approach, then it's probably as well for a professional accountant to check the addition before the figures are submitted to the court. Two hours work at an hourly rate, perhaps. There might be a need for a solicitor on a similar basis, but that's probably all that the executors absolutely need to spend money on.

Also, I cannot hear that solicitor's name without giggling, because she is unfortunate enough to share both given name and surname with a well known TV character. I have little doubt that she is heartily bored of all the ensuing gags, but if I'd shared her name I'd have gotten married at the age of 12 if only to get myself a different name.

1260503.  Wed Nov 08, 2017 1:28 pm Reply with quote

barbados wrote:
Well in that particular instance more than one organisation/person benefits, but to turn that around are you happy that closing the loophole that allows the British Red Cross to benefit?

Taking the practical viewpoint that, ultimately, any revision to the law in this field will potentially have detrimental impacts to some parties, the question is whether the overall benefit to the wider public would outweigh that of the potential detriments.

If a cost benefit analysis was done that showed that there was ultimately a net benefit to the wider public, then to me it would seem to be an acceptable decision to close the loophole. It feels to me like you are setting out a rather extreme viewpoint of "nothing should ever be done", as if even the idea of any sort of reform is a personal affront to you.

1260505.  Wed Nov 08, 2017 1:44 pm Reply with quote

I think you misunderstand. My point was that there while the "right on" thing to do is to close the loopholes, there will be genuine losers - and these are the people that the loopholes have been put into place to help.

It isn't extreme, just pointing out that for every winner, there will be more than one loser. I would rather the loopholes weren't there, but if it means that someone can benefit (in this case the Red Cross) then the fact that someone else benefits (in this case the Duke of Westminster) is a small price to pay.

It of course also means that I can get a decent pension saving £300 a month instead of having to save £600 so I benefit as well

1260541.  Wed Nov 08, 2017 5:36 pm Reply with quote

Can you quantify to any extent the scale of the benefit to the Red Cross by having an HQ in Mayfair rather than some rather less expensive area?

1260544.  Wed Nov 08, 2017 5:45 pm Reply with quote

Other than that is where they choose to have their headquarters?

1260547.  Wed Nov 08, 2017 5:53 pm Reply with quote

You wrote of it as if it was a really big deal for the Red Cross that the D of W would do that, and I wondered if there was any factual basis for that.

1260554.  Wed Nov 08, 2017 6:03 pm Reply with quote

I said that the red cross (along with other charitable organisations) benefit from the DoW's philanthropy I'm not sure how much qualifies as the peppercorn rent that they pay for they head office, but it is likely to be cheaper than what they would pay for similar office space in central London.

1260573.  Wed Nov 08, 2017 7:00 pm Reply with quote

That may very well be. But if the British Red Cross had to pay market rent, and on that basis decided that its HQ would have to be in Scunthorpe rather than Mayfair, would that be a bad thing?

1260585.  Thu Nov 09, 2017 1:39 am Reply with quote

You tell me, I'm happy that because they don't have to pay market rent. Although to correct a few things, firstly, the British Red Cross HQ is no longer in Grosvenor property - they moved to the city, I was looking at an old directory, and secondly, they were never in Mayfair, they were in Belgravia. But thats by the by It may be as they are in Moorgate, the benefit from the kindness of another philanthropist - A certain Richard Whittington (although it comes now in the form of the Corporation of London)

However as we are discussing the tax benefits of individuals lets stick to Mr Grosvenor, and instead turn to Open Age or an organisation called EPNAVCO - who do benefit from their rent being largely discounted thanks to the DoW.

Would they be as effective if they had to pay full rent where they are based? Well Open Age certainly wouldn't be as effective should the move out of Westminster, they are specifically a Westminster charity set up for the puropse of the elderly in Westminster - so I doubt it. EPNAVCO are not based in Belgravia, or Mayfair so again I cant see the benefit of not making use of the DoWs Philanthropy.

1260602.  Thu Nov 09, 2017 5:08 am Reply with quote

barbados wrote:
I cant see the benefit of not making use of the DoWs Philanthropy.

Indeed, but I do wonder how philanthropic he (and others) would be if there were no tax advantage involved.
Also, it seems to me that the philanthropy involved in not taking an income on a property you don't need to take an income from is qualitatively different from the philanthropy that led to the creation of communities like Bourneville, Saltaire and New Earswick (which is not to say that the Cadburys Salts and Rowntrees didn't see a benefit to creating them). For a more modern example you might look at the Bill & Melinda Gates Foundation. Maybe different words are needed for the passive use of the tax system to benefit someone else's efforts, and the active promotion of projects the philanthropist deems worthwhile.

1260605.  Thu Nov 09, 2017 5:45 am Reply with quote

crissdee wrote:
If they want to stop people using the loopholes to avoid paying tax, then the simple answer would be to close the feckers!

Which is, of course, what every government tries to do. The problem being that any change to the tax law to close one loophole will almost inevitably open another one. And while huge companies like Apple can spend millions on highly paid lawyers who do nothing all day except look for these loopholes, then it's always going to be a pretty one-sided battle.

Alexander Howard wrote:
An off-shore structure is a way to keep capital in a jurisdiction where capital is not hit for ludicrous tax. It does not shelter the actual income landing in the pocket of the beneficiary: that is income tax wherever they live.

Sadly not in this case.

One part of the Paradise Papers concerns the tax affairs of three stars of the popular BBC TV show Mrs Brown's Boys. It seems they were able to be paid without having to pay any tax.

The scheme went like this: instead of being paid to them directly, their salary was paid by the BBC to an off-shore company each had set up in Mauritius. These companies then made a loan to the TV stars of hundreds of thousands of pounds. None of these people has made any attempt to pay off any of these loans, so it looks suspiciously as though they are loans in name only. However, since they are "loans" and not "income", they are not liable for tax.

Rangers football club recently got into trouble for paying their players in this way. I had thought that such a scheme had been ruled illegal. However, when double-checking the facts of the case, it seems the only thing Rangers were pulled up on was the fact that the employer had used the scheme to avoid paying National Insurance and the like. It seems the employee was perfectly fine to dodge tax in this way.

Alexander Howard wrote:
As a result, the Treasury misses a direct take but the funds invest in developing property that would otherwise be left to fester, or boosting trading companies, all of which actually benefits the nation and even the Treasury more than if the funds were bled dry by tax before they could invest.

Having money temporarily sitting in a bank account in Mauritius in no way involves it "developing property, or boosting trading companies", and it certainly doesn't benefit the nation or the Treasury.

Alexander Howard wrote:
the funds' investments have given us all those shiny new buildings in our cities that house the trading businesses which pay tax on their own profits. It's a win for us.

That's the language of trickle down economics, which has never been terribly convincing, even when it was popular back in the 80's.

1260614.  Thu Nov 09, 2017 6:08 am Reply with quote

Yeah I see what you mean, but a result of philanthropy is a tax benefit, so while Bill Gates might not set out to get a tax break he will get one. Besides I doubt that the DoW sets out to do good things just to save a couple of quid - his family have been doing it for generations.

I was involved in a conversation elsewhere in the internet some years ago about philanthropy, it was hard to tell whether they do it to make others feel better, or if they do it to feel better about themselves. I donít think thee is actually a correct answer to that question, but it promotes an interesting conversation


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