Foreword - February 2018
The new year brings a new start, including for the forewords to each edition of this publication. Worryingly, every issue’s lead editor (me, in this instance) will now have effective carte blanche to air professional and/or personal views on important developments and issues connected to our world and practice. Undoubtedly, we will consider that our pieces raise some fundamental or valuable point – time will tell whether or not that is the case! And so to this first attempt…
Much has been said about the UK’s future in recent months and years. Not all of it makes sense, involving rather a lot of crystal ball gazing. Brexit has heightened the debate in numerous areas and given rise to greater uncertainty. Selfishly, I am particularly interested in what it means for the private client and trust industry, both domestically and on the world stage. For example, English and Welsh law has been seen as a cornerstone of trust law for generations, but trusts are under pressure in the UK, and elsewhere, in many respects – fiscally, morally, in terms of compliance and regulation, and from a privacy perspective.
Testing blue box
Similarly, the UK’s non-domiciliary regime has been an enormously successful mechanism over the years for encouraging wealthy families and individuals to come and spend time in the country. Now, I do not want to get too (or, indeed, at all) political about whether what has been, or is in the process of being, changed is right or wrong, though I do have my views. I do, however, want to highlight what worries me in terms of process.
What concerns me most is this: the UK, like all countries, has a unique proposition to sell. There are nuances and differences that can be exploited and that make a difference to the success or failure of the jurisdiction and the various industries within it (including our precious private wealth, trust and estate planning sector). However, we are all caught in a series of legislative and regulatory waves that extend from international committees, governments and regulators down to service providers. The pressure and expense is immense for all those involved. But that pressure, it seems to me, is generated without sufficient thought at each level to the consequences and cost in terms of the opportunities that are foregone through the insatiable desire for implementation and effect.
Further, and most critically in my view, what most private clients and families value is certainty. They want to know what information can legitimately be considered private, what will be available to UK authorities (and potentially exchanged with non-UK authorities) and what is to be public. They also want to know how they and their structures will be taxed. They don’t just want to know how that will work in a single year and then have to review everything again the following year, the one after that and so on. Yet this is exactly what we are asking of people and businesses.
Year on year, and at a blistering pace that rarely provides sufficient time for consultation – recently resulting in the introduction of tax laws from a date earlier than the legislation itself was enacted – we make further changes, introduce new and more complex regimes, and expect everyone to keep up and not feel overawed or disenchanted. Add to that greater potential penalties, threatening revenue letters and BBC reporters door stepping you for acting immorally. It is a far more aggressive and less attractive environment in which to exist. It might even put people off striving to create wealth or expend it openly, something that underpins our broadly capitalist environment.
I think, to a visitor from Mars, this would all seem rather shambolic. It shows very limited strategic thinking for the future success of the UK (and other places) and it often appears to be the consequence of media hype and political gambling (with the usual short-term goal of re-election apparent from the outset). Again, the answer and approach may not be one I like from a personal or political perspective, although I will continue to hope otherwise. But can’t we please adopt a rather more measured and calculated approach to what we are doing? I believe that can only be beneficial in the long run.
1. Right, rant over. You’ll find some less provocative and far more erudite pieces to feast upon in the pages that follow.