From Offshore Business – Inside Track       July 2001 

Opportunity Knocks

Each month our Inside Track feature will bring informed industry comment from players in the offshore market.    The series kicks off with a call from Duncan Watson, principal of Expatriate Financial, for IFAs to maximise their wealth by offering a complete, holistic financial planning package to clients.

A recent survey has revealed that over 95% of tax payers and business owners in the UK, and throughout the world, may have no knowledge whatsoever of the tax to be saved by “going offshore”. Research conducted by Expatriate Financial, shows both individuals and businesses could be paying in excess of 50 per cent more tax than necessary – despite the fact that 62 per cent of the world’s money actually does go through offshore centres. Interviews with qualified international financial advisers revealed that most taxpayers did not seek specialist advice in order to pay less tax. Often the advice given by their accountants did not even touch upon the tax-savings to be had by registering an offshore trust or international business corporation, and thereby protecting their assets, their income and their estates from taxation, perfectly legally. This is surprising.

However, there are signs of a change in attitude. The larger legal and accountancy firms, and specialist companies offering advice on international offshore financial centres, are bringing about a new thinking in the offshore market, so often in the past associated with criminal activity.

The aura of mystery surrounding these centres has disappeared to the point where they are now recognised, quite properly, as an essential part of the world’s financial system. In the past, there simply has been a general lack of knowledge, with people over-taxed and under-informed.

For instance, the major banks have had offshore brands for decades. Entrepreneurs such as Richard Branson have saved millions in tax by using offshore tax strategies. In 1992 he saved £218 million from tax by putting the proceeds from the sale of Virgin Music in an offshore trust. Virgin Mobile is also held in an offshore entity in a trust set up by him.    All the multi-national companies have their own favourite tax havens. The super-rich of most countries have also employed offshore tactics for generations, to protect inheritances.

These facilities, which are relatively inexpensive and simple to arrange, are now available to more ordinary individuals and businesses with assets to protect, or tax to defer or legally avoid. However, Expatriate Financial’s survey highlighted the fact that thousands of wealthy people, in addition to the less wealthy, with complex geographical and domestic situations, are in real need of proper advice.

Many of the IFAs spoken to, underestimate their value in the international marketplace. They saw their job as assisting clients establish savings/retirement plans and lump-sum investment products only. The more successful remainder had developed skills in using offshore trusts and international business corporations to solve the problems, and satisfy the needs of their more well-off clients, seeking, when necessary, the appropriate legal or accountancy advice from other experts.

Indeed, the alliance between the three specialists is now essential in multi-national family situations, due to the complexities of residence, domicile, divorce and inheritance. This presents IFAs, both in the UK and around the world, with a major opportunity to provide true, holistic financial planning to the vast and increasing number of individuals and families, some multi-national, with financial interests and assets spread right across the world.

The new income stream to be enjoyed just by helping their clients establish an offshore trust, could be vast added to which they will enjoy the extra business through referrals from the same family.

Expatriate Financial has produced a report which explains in depth the facets of offshore trusts and offshore companies, and how ordinary – and extraordinary – people can get the best out of the tax-saving possibilities for business and personal purposes, regardless of nationality, country of residence or domicile.

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