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What advisers can learn from Nigel Farage

28th Jun 2013
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Simon Sweetman gets to grips with the implications of the UKIP leader's tax affairs.

Nigel Farage has admitted setting up an offshore trust in the Isle of Man, though apparently he had very little idea about what he was getting into and the money was all consumed by administrative charges. It held shares in a company called Farage Ltd, which still exists though its latest accounts are overdue and it seems to be in a voluntary arrangement with its creditors. Mr Farage suggested he had little to do with the company though he apparently was the company secretary until March 2012, and that all the dividends were paid to his brother.

He said that he never made anything out of the trust arrangement and was “not rich enough” for it to do him any good. Whatever you think of Mr Farage’s politics, you have to feel a twinge of sympathy.

It is a story with some resonance. How many times do you come across the situation where somebody – probably an IFA – has set up some kind of trust arrangement for a client who comes to you in some bewilderment as to what this is all about ?  Or, even more mundane, you have had to sort out the nil rate band discretionary trust which some solicitor put into a will without thinking.

The accountancy profession – more accurately the finance business, or at least the top end of it – seems over the years to have mutated from actually preparing accounts and giving helpful advice on tax issues to a kind of automaton - a tax mitigation machine, where mitigation covers everything from pointing out the availability of certain reliefs to outright fraud on HMRC.

Perhaps the greatest achievement of the tax avoidance industry (helped by the importation of the American culture of “if it moves sue it, and if it doesn’t move, sue it for not moving”) has been to convince many otherwise blameless high street accountants that they ran the risk of being sued by their clients if they did not offer them every conceivable form of tax scheme, however implausible (a risk which is not worsened by Mehjoo v HMRC, where I would follow Mark Lee’s interpretation).. These days your accountant in the street may have learned to be rather suspicious of such smooth operators and they and their clients may have learned to be a little more sceptical.

Perhaps Mr Farage’s example will help.

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By itp3asso
01st Jul 2013 14:53

theegg
nigel s all right leave him alone...

as an ex trader who plied his profession in the city he knew precisely what he was doing setting up such structure especially within the familial nucleus wih brother as dividend beneficiary .

to be brief th reason it makes no money is it is probably a tax offset against his other earnings thus availing him of a nil tax position on his other emoluments .

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