You have probably read in the press about a variety of high net worth and well known individuals that have been “somewhat let down” by investment schemes that have rather backfired. The investments have tended to be in the arena of “alternative investments” into film and music businesses. As ever, not everything that you have read in the media is either fair or accurate. Indeed I am still unclear as to why anyone’s personal tax affairs become public knowledge as this surely breaches confidentiality rules and data protection laws, something that I take very seriously indeed.

Anyway, the premise of such schemes is meant to be to genuinely kick start businesses, notably the film and music businesses, but frankly could be any type of business. The great disappointment is that these ideas are often created for the tax benefits rather than helping a business to grow and prosper. Indeed I often come across schemes that are designed to make a deliberate loss or have no real prospect of making any money. As a result tax advisers (many well-known ones) promote these enterprises, which come with some fairly hefty fees.

In many cases, the theory of the investment is untested. There is reliance on QC opinion and previous interpretation of tax laws. However HMRC is determined to close down loop holes and to be blunt, that is always their objective. There is a degree of “playing with fire” about many of these schemes, of course determining which is which is not always straight-forward and even the regulator would point out that these sort of schemes are for a rare type of investor, a sophisticated and professional one (not simply one that wants to save tax).

Setting aside the above, what concerns me is the advice that many of these high net worth and high profile individuals receive. It would appear that their advisers fail to either explain what the investment really is about. However, more importantly, I wonder how many have actually had any “proper” advice, providing a values based financial plan, that is not about how big the returns might be or how little tax can be paid, but about how well the financial plan serves that persons life. I have a suspicion that many of those football managers, comedians and pop stars have not been asked the right questions or indeed the big question – how much is enough? (without judgement). I suggest that to avoid a comedy of errors, give me a call if you want to find out the truth about money and how it should serve you (not the other way around).

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