To hear about tax planning and the things that need to change in the UK tax legislation Finance Monthly speaks with Adele Raiment, Director of the Tax Advisory team that specialises in entrepreneurial and privately owned businesses at Mazars LLP. Adele’s main area of expertise is working with privately owned businesses to develop and implement a succession plan, to ensure that any assets that the shareholders wish to retain are extracted in a tax efficient manner and she also works with all parties to assist in the smooth running of transaction.
What are the typical challenges faced by shareholders of entrepreneurial and privately owned businesses in the UK, in relation to the management of their finance?
I think the main concern on the horizon is the potential impact of Brexit on the UK economy and business confidence more widely. For privately owned businesses in the UK, many are still very cautious following the 2008/09 recession, and with the uncertainties surrounding Brexit, it is difficult to plan too far ahead. One of the main priorities of shareholders is ensuring that they have sufficient cash reserves to ride any potential downturn in the economy whilst recognising that they need to invest and innovate to thrive.
What is your approach when helping clients with tax planning?
My approach is to primarily understand the client’s commercial and personal objectives in priority to considering any tax planning. When planning for a transaction, I frequently find that the most tax efficient option isn’t always going to meet the key objectives of the shareholders or the business. It is important to consider the shareholders and the business as one holistic client, and therefore strike the right balance between personal, commercial and tax objectives. In respect of tax specifically, it is important to take all relevant taxes in to consideration whether it be corporate or personal. A good understanding of all taxes is therefore required.
My clients vary from FDs, to engineers, to self made entrepreneurs - all requiring different approaches. I believe that it is fundamental to get to know your client and adapt your approach to ensure that they understand you and what you are trying to achieve.
What are some of the day-to-day challenges of operating within tax planning? How do you overcome them?
As I predominantly work on transactions, I often work very closely with other professionals such as corporate finance professionals, lawyers and other accountants. The key challenge to this is making sure that the whole team is working collaboratively to achieve the best result for our client.
We are also under pressure to keep costs down, whilst ensuring that we provide quality advice. This can be difficult if the team has multiple transactions on the go at the same time and senior resource is constrained or if the project is wide-ranging, requiring several specialists to input in to the advice. The key to this is having a driven and supportive team, where teamwork and openness is pivotal to success. The working environment of my team at Mazars is incredible as we encourage open discussions on a variety of areas but one of the most useful ones is on technical uncertainties, which encourages consultation in times of uncertainty and technical development.
In your opinion, how could UK tax legislation be altered for the better?
Despite an exercise to ‘simplify’ UK tax legislation over more recent time, the legislation has increased in volume. A good example of this is that there are now two separate corporation taxes acts, when previously there was one. Having said this, the majority of the language used in more recent acts has made the legislation more user-friendly. However, there are still pockets of the legislation that seem to have been rushed through parliament and the practical use of the legislation was not considered fully prior to being enacted. This has resulted in several pieces of legislation being amended a year or two down the line. Although there does seem to be an element of consultation between Practice and HMRC prior to some legislation being enacted, I’m not always convinced that HMRC take on board the feedback. I therefore feel that a more rigorous consultation process should become standard to ensure that the commercial and practical elements of legislation are considered prior to enactment.
Contact details:
T: +44 (0) 121 232 9583/ M:+44 (0) 7794 031 399
Website: www.mazars.co.uk
Email: adele.raiment@mazars.co.uk
LinkedIn: http://uk.linkedin.com/pub/adele-raiment/13/693/360
Email: adele.raiment@mazars.co.uk
LinkedIn: http://uk.linkedin.com/pub/adele-raiment/13/693/360
Saving and investing money are two completely different things. They each have a different purpose and play different roles in your life. You should make sure that you are clear on the concept before deciding which step to take on your financial journey to avoid stress and help towards meeting your financial goals.
It may seem like a simple question, but wondering whether you should save or invest will completely depend on your financial situation and what you want in life. So perhaps the best way to start is to work out the difference between saving and investing for, defining both concepts.
Saving
Saving involves you putting money into an account and adding to it regularly. Your capital will not be at risk and you have the chance to grow your money by earning interest on it. But there is a risk that the rate of interest paid on your money may not be higher than the rate of inflation and your money may not increase in value.
Savings are great to have as they are always available to access and can be used for many things such as emergencies or a down payment on a house. You can also set up savings accounts for major life events such as retirement and death. With the rising costs of funerals, for example, saving money for it now will help loved ones find a funeral director and pay for it without any stress or worry.
Pros: A savings account is easily accessible when you need money you can go to your bank and withdraw what you want. When you set aside money into a savings account, you’re not putting your funds at risk - a savings account is stable.
Cons: With low risk, comes low returns. Interest rates on savings accounts are lower than any other account. If you are planning on leaving the money in there for a long period of times, you may want to consider a different type of account with a higher interest rate.
Investing
Investing involves you allocating money for a long period of time into an investment, in the hope of making more money on it. When it comes to investing, there is no guarantee you’ll get your initial capital back, or make a profit. But you could end up growing your money, depending on how your investment performs.
Pros: When buying stock or another investment, you do so hoping that your investment will appreciate over time and earn you some money back. Stocks typically have the highest average return. However, they come higher risks. When looking to invest your money you have lots of choices too, from a classic car to a house.
Cons: Investing involves you allocating money for a long period of time into something that should gain in value, in the hope of making money on it. When it comes to investing there is no guarantee you’ll get your initial capital back, or make a profit. But you could end up growing your money, depending on how your investment performs.
Taking money from an investment is not as easy as withdrawing it from a savings account. While it’s best to invest for the long term, if you need the money and want to sell what you’ve invested in you need to wait for the funds to become available.
So whether you put the bulk of your money into a savings account or into an investment, it will depend on various factors and what suits your situation best. Both of them are important for overall financial security.
Many are fearful of investing, many already did it, others are on the fence as to whether it’s still worth it. Nicholas Gregory, founder and CEO of London-based cryptocurrency enabler CommerceBlock, here provides Finance Monthly with some insight as to whether you’ve missed the boat or not at this point.
The chatter surrounding Bitcoin investments has reached fever pitch in the new year, and the higher its value rises, the louder it gets.
But how do you time an investment in a market like this, and is it worth it?
A massive stumbling block for would-be investors is the fact that nobody inside the industry truly understands how valuable Bitcoin really is. Fair value is difficult to pinpoint, and the market has been gyrating wildly as record high after record high has bowed to the cryptocurrency’s seemingly unstoppable rise.
Meanwhile skeptics continue to question whether Bitcoin has any value at all.
Warren Buffett of Berkshire Hathaway famously called Bitcoin a “mirage” back in 2014, and his criticism still echoes today. This is largely because regulation in many jurisdictions is yet to catch up.
Putting the intrinsic value of Bitcoin aside for a moment, the appeal of cryptocurrency largely depends on whether or not the investor expects other people to want to take it off them at a later date.
If people think Bitcoin has value, then it does. This faith - that it is a store of value and means of exchange - is what has underpinned traditional Fiat currencies ever since stone money was created in Micronesia. Those ‘coins’, which could be so large they weren’t even moved, were also a store of value solely because a community of people agreed they should be.
This same dynamic can lead potential investors to grow nervous over the future value of Bitcoin but, as history shows, it’s nothing new.
I, and my colleagues at CommerceBlock, help companies do business in Bitcoin. So if it’s true that Bitcoin is worthless, then we are in serious trouble.
What makes me more certain than ever that we have a future, is the same excitement that is driving the headlines. Bitcoin promises to be a currency not anchored to the old guard, not beholden to bankers, lawyers, high fees and costly international settlements. It’s a no-brainer for businesses who can accept huge payments from the other side of the world in minutes.
So what impact does this have on the value of Bitcoin? Well, anyone who has observed the astronomical growth in its valuation over the course of 2017 will know that its price has been volatile, to say the least. At the start of the year it was at around $800, before more than doubling to $2,000 in May. Then, in August, it broke the $4,000 mark for the first time. As I write this, Bitcoin is worth over $16,600 just four months later.
However, it’s a leap of faith to chase a market that has risen so dramatically. At the same time, I am one of those who believe bitcoin will be worth $100,000 one day. It’s either that or it will be worth nothing at all.
This is only my opinion. But even if I’m right, I can’t tell you how long that will take or what bumps we will encounter along the way.
In investing, you can be right in the long run, but still lose money. It is best summed up by a retort to famed hedge fund manager Michael Burry, played by Christian Bale, in the film The Big Short, as he defends his decision to short the housing market.
Burry tells a disgruntled colleague: “I may have been early, but I'm not wrong.”
Then comes the reply: “It’s the same thing.”
