Book Review of A Modern Approach to Lifetime Tax Planning for Private Clients (with precedents)
by Chris Whitehouse and Prof Lesley King (Jordan Publishing, ISBN 9781846617560)
The book’s authors acknowledge in their preface that “a brave new world has come into existence” with tax avoidance (as distinct from tax evasion) now having become more widely condemned. The words from Lord Walker in the ‘Hastings-Bass’ appeals of tax avoidance being a “social evil” areset out, but Chris and Lesley state that they are dealing with “middle of the road non-abusive planning” methods which are not viewed as anti-social. The law is as at 1 December 2013 but proposed changes from the 5 December 2013 Pre Budget Report is included where appropriate.
With two such revered authors this new work published in February 2014 comes with much expected of it and it does not disappoint. It methodically, yet clearly and with detailed clarity, sets out the law in this ever changing and increasingly complex area. It is the companion volume to their other book A Modern Approach to Wills, Administration and Estate Planning.
The area covered is huge with the contents pages alone covering 19 pages. The book divides matters up into seven main sections, giving commentary and worked examples throughout. The first two sections examine the legal framework, before the other sections turn to specific topics and to tax planning strategies. The first of the framework sections is “Essential Law on Giving” and the chapters deal with capacity, the power of attorneys and deputies to make gifts, undue influence, the formalities for perfecting the gift, creating a settlement, perpetuities and accumulations, modifying trusts, providing information to beneficiaries, letters of wishes and presumptions of resulting trust and advancement.
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The second section covers “Essential Tax Law” with chapters on the general principles of IHT, reservation of benefit and Pre-Owned Assets Tax rules, the IHT taxation of settlements, general principles of CGT, the CGT on settled property, other taxes such as income tax and VAT and anti-avoidance so the General Anti-Avoidance Rule and Disclosure of Tax Avoidance Schemes are discussed.
Specific areas and planning strategies are then covered with the third section dealing with trusts and settlements so looking at drafting considerations, the tax consequences of creating a trust and ongoing charges, administering and ending settlements, pilot trusts with specific mention of the uncertain future for these post ‘simplification’ (which obviously pre-dates the June 2014 HMRC proposals), trusts for the disabled and bare trusts.
The fourth section is on “the family” so looks at gifts to spouses and civil partners, to children and remoter issue, including trusts for vulnerable beneficiaries, to cohabitants, the consequences of divorce and separation and a chapter on old age addressing the issue of the desire to protect assets against care home fees.
The fifth section then looks at particular assets in more detail so planning with the family home, main residence relief, chattels, businesses and farms, tax efficient investments and insurance-based products.
In the sixth section attention is given to planning using statutory exemptions and reliefs, so the joint ownership of land, gifts for family maintenance (which can be easily overlooked in practice), normal expenditure out of income and charitable giving. The last section is called “residue” and ‘sweeps up’ such vital topics as taking instructions, identifying objectives and finding out who owns what.
The index is detailed but it is easy to find your way to the required pages in the book. If you have heard either Chris or Lesley lecture in person, you will ‘hear’ their turns of phrases and easy to follow style (packed with technical punch) coming through the pages to you.
There are useful clear precedents throughout the book with accompanying drafting notes where relevant. Thankfully there is also a CD-ROM with the hardback version of the book which contains the precedents in electronic format. There is an eBook version too.
The practitioner is expertly guided through this labyrinthine area with traps and pitfalls pointed out and planning tips given throughout, for example, on reducing anniversary charges. Cross references are given to where topics are developed further in the book such as reference to where the detailed calculation of an exit charge can be found when considering terminating a trust.
This is a ‘must-have’ text and essential as a point of reference (or learning) for a practitioner of any level engaged in advising clients on tax planning. At £90 for the hardback version it is not cheap but it is money very well spent. The only possible criticism is that events and new law will quickly overtake some of the valuable content of this first edition and it is hoped that early updates will be available to keep this up to date.
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