I refer you to my previous posting, and.....
....on the matter of Remuneration Trusts, their bona-fide and the Dextra Case, I submit the following to clarify matters beyond all doubt and in the hope that it will also end the childish and totally unnecessary, undignified character assassination some contributors consider it their right to dish out.......
I have asked Mr Ashcroft to post this message on my behalf.
It has come to my attention that various contributors to this Forum have made extraordinarily critical comments upon the use of Remuneration Trusts. Those comments seems chiefly to rely upon: (i) the advancement of technical remarks in a Forum context which was never designed to accomodate them, and for lack of space degenerate into rather unsophisticated charge and counter-charge; and (ii) ad hominem attacks, which in my view have no proper place in any reasoned debate.
I am the senior partner of Baxendale Walker, Solicitors, a 5 partner firm with offices in London, Nottingham, Glasgow and South Africa. I have specialised in tax and commercial trust law for 20 years. I am the author (with Andrew Thornhill QC) of The Law and Taxation of Remuneration Trusts and several other books. I am currently writing the 2nd Edition of LTRT. I trust, therefore, that no ad hominem challenge will be made to my expert professional qualifications.
Mr Ashcroft in the Forum recently quoted substantial parts of the Information Release issued by my Firm on the Dextra litigation. Naturally, I endorse such quotation. The criticism of it is flawed, primarily because the relevant decision to those expert and professionally advising on current R.T. planning was not that of their Lordships, but that of the High Court, from which the Revenue did not appeal. The High Court decision (affirming that of the Special Commissioners) was that:
(1) Contributions to an R.T. are deductible for corporation tax on ordinary accounting and tax law principles;
(2) R.T.Â’s do not constitute tax avoidance;
(3) Loans from an R.T. to directors or employees are not taxable as income;
(4) Distributions to sub-trusts are not taxable as income.
None of these rulings was appealed by the Revenue. They are decisions of English law which bind the Revenue and the Special Commissioners for all future R.T. cases. In view of these rulings, it is apparent that an R.T. does not constitute a ‘Reportable Tax Avoidance Scheme’.
Their Lordships expressly ruled that contributions to an R.T. are deductible for corporation tax on ordinary accounting and tax law principles. They ruled that the 1989 statute (substantially repealed by Finance Act 2003, as amended by Finance Act 2004) did have effect to delay the deduction of contributions for corporation tax purposes in relation to a specific type of R.T. Their ruling does not affect those other types of R.T. and other corporate commercial trusts utilised by clients of my Firm.
One appreciates the general cynicism with which tax service offerings on a public web site are viewed. In relation to the advice given by my Firm to its clients, such cynicism is however misplaced: (i) The establishment of any corporate RT and the timing and amount of any contributions to it are and must always be declared openly on the face of the founding companyÂ’s accounts. There can never be any question of hiding the matter from the Revenue; (ii) my Firm invariably makes available to the Revenue not merely all documents concerning an R.T. but our otherwise privileged written advice also. Given that I publish entire Books on these matters, this is hardly surprising.
So far as I am aware, Mr Ashcroft uses exclusively my Firm for the professional provision of legal advice and assistance to his clients in establishing R.T.Â’s and other matters. The Revenue has never contended that R.T.Â’s established by such clients fall subject to the deductibility restrictions now affirmed by their Lordships.
I am grateful to the Forum Administrator for allowing publication of this long posting. I would respectfully suggest that if any Contributor wishes to engage in debate of the above matters, he should contribute an Article to Taxation or The Tax Journal, with notice to this ForumÂ’s readership. I or other contributors to these professional journals can then respond. Such publications have sufficient space to allow the intricacies of these highly sophisticated technical issues to be debated at proper length.
I trust that my intervention will not be regarded as stifling debate, but attempting to nurture it in the approriate professional forum.
Paul Baxendale-Walker
___________________________________
Rex Ashcroft Cert.PFS, FPC
Director
Wealth Protection International Limited
0800 7317479
info@wealthprotect.co.uk
