Palladium Newsletter - June 2011

Dear Clients,

Welcome to our June newsletter. We hope that you are all managing to enjoy what has been a special Wimbledon so far – and for the Nadal fans out there, we are behind you! This month we have seen turbulence and unrest in Greece which underlines the need for correct housing of assets. Our focus this month is on our new consultant in London, Michael Woodward.

We are pleased to introduce Michael Woodward as the newest member of our team in London. Michael has been an English qualified trust and tax lawyer since 1982 and we are thrilled to have him on board. His previous experience includes 13 years at Barclays Wealth and work at Fladgate Fielder. He has worked extensively in cross border structuring for individuals and institutions over many years and has been a member of STEP for 9 years. He is registered with and authorised by the FSA and is able to provide guidance in relation to investment issues.

In the course of a deal involving BVI companies, lawyers tend to take security on the assets which the BVI companies own in the jurisdiction of the deal. One means of gaining extra security over counter-party BVI companies (eg guarantors) is to file a public share charge over relevant BVI companies’ shares. The effect is that the BVI company’s shares are frozen without the chargee’s written authorisation.

We can assist with this process by drafting the necessary resolutions, the register of charges and filing the charge with the BVI Companies Registry. Often this service is required as an adjunct to Palladium issuing BVI legal opinions and is something which should be on the ‘wish list’ for every lender to BVI companies.

A United Kingdom Limited Liability Partnership (LLP) is a useful vehicle for international commercial activity. To recap, the UK LLP is a body corporate with a legal personality that provides its members with limited liability which is also fiscally transparent: the members of an LLP are taxed as though they are partners in a partnership.

UK tax only arises on non residents of the UK on their UK source income. Therefore, when a UK LLP is engaged in a trade, profession or business, with a view to making a profit, and has no UK members or UK trade, no permanent establishment or UK source income, the UK has no authority to tax the LLP or its members.

Opportunities are therefore optimised where UK LLPs are formed to carry out non UK business by companies in zero or low tax jurisdictions. Note, however, that a UK LLP can not obtain a tax residence certificate. Further, as a UK LLP is not subject to UK tax on profits made, it may not tap into the UK’s network of double tax treaties.

If correctly structured, international business operated by UK non resident members will not be subject to UK taxation, but will, nevertheless, present a UK presence to the outside world.

We hope you enjoy the articles below and find them an interesting resource.

Please visit us at www.palladiumtrustservices.net or contact me directly at stephen@palladiumtrustservices.net if you would like more information on what Palladium can do for you.

Until next month,

Stephen

Investec deal highlights use of Switzerland for Swiss resident offshore trusts - and their banking:
http://www.businessday.co.za/articles/Content.aspx?id=146892

UK’s “elite” schools a draw for Asian billionaires:
http://www.telegraph.co.uk/news/worldnews/asia/china/8594329/Eton-and-Harrow-biggest-draw-for-Chinese-millionaires.html

Swiss banks ‘safest’ in the world:
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8578085/Switzerland-passes-new-rules-to-make-banks-safest-in-the-world.html

Law Society guidelines on privilege and when solicitors may disclose tax avoidance ‘schemes’:
http://www.lawsociety.org.uk/productsandservices/practicenotes/taxavoidance/4967.article

Proposed rules for statutory residence test in the UK:
http://www.hm-treasury.gov.uk/consult_statutory_residence_test.htm

Maximising entrepreneur’s relief:
http://www.growthbusiness.co.uk/channels/raising-finance/financial-management/1624723/maximising-entrepreneurs-relief.thtml

India raises interest rates for 10th time in 15 months:
http://www.telegraph.co.uk/finance/economics/8578841/India-raises-rates-for-10th-time-in-just-over-a-year.html

UK Govt to release list of ‘high risk’ tax schemes:
http://www.parliament.the-stationery-office.co.uk/pa/cm/cmtoday/cmwms/archive/110524.htm#d2e75

Pan-European corporation tax rate one step closer to reality – but not without resistance:
http://www.irishexaminer.com/ireland/eight-countries-reject-eu-tax-proposal-155141.html

Bank of England to be stripped of major powers - in favour of floundering ECB?
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8546493/EU-plans-to-strip-UK-of-bank-regulation-powers.html

Non-dom rules simplified – and encourage UK investment, finally:
http://citywire.co.uk/money/treasury-tackles-chaotic-non-dom-rules/a503107

HSBC whistleblower causes UK offshore account holders to panic:
http://www.hm-treasury.gov.uk/d/consult_money_launder_regs2007_gov_response.pdf?link=contentMiddle%20contentMiddleWide

Treasury finally bans criminal sanctions for non-compliance of UK AML laws:
http://shanghaiist.com/2011/04/28/chinas_rich_people_so_long_and_than.php