1967: The Graduate – Nichols

Offshore Investing

Offshore investing can be a very wise strategy for investors, however much caution is needed. The over-arching principle should be simple – placing money offshore means it grows free of tax until it is brought back to the UK or anywhere else – at which point it will be taxed appropriately. In its proper place, offshore investment is little more than delaying tax. In an ideal world (for the investor) you bring funds back to the UK when your rate of tax is more favourable. To my mind there is nothing morally or ethically wrong with this. It is not tax evasion, it is tax delaying – and not in the sense of paying HMRC late, but as appropriate (when the money is in the UK).

Traps To Avoid

So it is disappointing to note that The Times has today reported that various well-known people have been named once again in an offshore scheme (Liberty Tax Strategy) that is so aggressive in its approach to create artificial losses that it potentially could be regarded as tax evasion. This is of course up to HMRC to decide, not The Times. However I do wonder what on earth some advisers tell their clients. I would like to think that everyone has been advised appropriate or suitable investments that they can understand. However it must be particularly important for those in the public eye to avoid any suggestion of improperness when it comes to tax. Certainly irrespective of fame, our clients are not put in a position where they may have to do some serious explaining to the HMRC and possibly the media. Yet this is precisely what journalist, BBC Watchdog and The Weakest Link host Anne Robinson has read today in The Times. She’s not alone either – several members of the “boy band” Take That are also caught in the crossfire. There is believed to be around £1.2bn invested in the scheme by around 2,000 investors.

Tax is not the focus of your Financial Plan

The heart of good investing is making sure that your investments are suitable to your financial plan. It is very hard to believe that the sort of “investing” that I’ve outlined above is in any way helpful to a good financial plan – and certainly not a great one. Your financial plan should reflect your values and be structured around your requirements. Tax is a part of the investment discussion, but it should never dictate the terms. It would appear that as in the film “The Graduate” a certain Mrs Robinson, journalist and Watchdog consumer champion, might have known better. Our clients won’t get exposed to this sort of thing.