A Place to do Business

The Evening Standard of Thursday last week published the results of an exclusive survey of FTSE 100 firms and found a ‘series of the UK’s largest listed businesses have no immediate plans to return many staff to offices’.

The Evening Standard interviewed advertising guru Sir Martin Sorrell who said ‘the ecosystems around the office are crumbling, it is a desert, so we have to get back to work’!

The Evening Standard then goes on to say Sir Martin ‘is right, but the answer lies largely with the Government, which is dismally failing to give a proper lead and instead pushing too much responsibility onto businesses.’

I disagree …

Businesses have an obligation to protect their employees; and they also have an obligation to look after their business owners. If they can give their owners a better return from reduced office costs with staff working from home then it makes perfect sense to allow the status quo to continue.

Businesses need time to see what the figures for this year look like –  they also need to consult with their staff and only then can they make some sensible decisions about what to do next – which will have nothing to do with the ecosystems around the office!

Yes, it may mean that in future years shops and offices will be converted to homes and office hubs may spring up around the periphery of London where staff can get to by car so as not be so dependent on public transport.

It has been said that following the Spanish flu businesses soon resumed work as normal, but that was then – this is now. Then there was no alternative to resume work as normal there was no other option – but now we do. We live in a digital world.

The trend was already been moving towards flexible office working – but now that trend has accelerated and may even go in a completely new direction. Over the past four months we have proved to ourselves, our business owners and employees that we can work from home – and in many cases it is beneficial for both employer and employee

Of course, Sir Martin Sorrell and the Evening Standard would like to see commuters return to the bus and the underground in their packed plenty – that is how they make their money – giving out newspapers to commuters in which they see adverts and stay in business. They would love the Government to intervene, but it would be wrong for it to do so.

It is true, pubs, cafes, restaurants and retailers which thrive on a busy metropolis are suffering – and many will go under – but these small businesses are also nimble.

New opportunities will arise – new hubs will be set up and these will also need pubs, cafes, restaurants and retailers – the trick is to know where these new hubs will be – and get ahead of the curve while there are still opportunities and before the prices go up. But make no mistake this will be determined by where the workers needed for the business– skilled or otherwise, want to live and how they want to work.

Designers tend to congregate around Shoreditch so it would make no sense to set up a hub for a design agency in Sevenoaks. However, many lawyers and accountants can work wherever they live. All they need is ways to communicate and work together without meeting face to face. It is therefore no surprise that CRM (Client Relationship Systems) are booming.

Times are changing, and it is not for Government to interfere. However, where the Government should be shrewd is with regard to the entrepreneur – the backbone of our economy and the major employer of staff (listen to David Nield’s podcast). It needs to provide entrepreneurs with tax incentives to adapt, grow and employ more staff and it also needs to be mindful – that once businesses start to think about relocation – there are alternatives which are not far away but on which corporate profits are taxed at 0%.

As we have seen in past podcast episodes, islands such as Guernsey and Jersey are good places to base a business or part of a business with a very attractive way of life and little or no commute.

The Isle of Man – is another example - no crowded public transport – no time haemorrhage in commuting – and possibly a more committed and happier workforce! There are lots of businesses or parts of a business which, rather than relocate to Islington – could consider relocating to the Isle of Man – but whether this is feasible will depend on what skills are needed by the business and whether they can be found in places such as the Isle of Man!

In this week’s podcast I talk to Tanya O’Carroll Managing Director of the Oak Group in the Isle of Man. This is not a tiny island but yet it is the base for many world-recognised and futuristic businesses.

Episode 28

Trusts in the Isle of Man, Tanya O’Carroll: Oak Group

In Episode 28, Caroline Garnham talks to Tanya O’Carroll, Managing Director of Oak Group, Isle of Man. Tanya has overall responsibility for the Isle of Man business delivering high quality client services whilst balancing the strategic financial and operational requirements of the business.

The question the Government should then be asking is not how much it should pay employers to bring their staff back from furlough – but how to keep these businesses afloat, in business and paying tax, in the UK. A good place to start would be to reinstate the entrepreneur’s relief at £10 million so that business are incentivised to grow beyond £1 million.

At the moment I have not heard enough from the Government as to what it is going to do to support our entrepreneurs; the backbone of our economy in this country.  

The UK Government needs to stop focussing on re-election and start getting real about its future – post Brexit!

Fight against abusive power

On the 16th July 2020 the Court of Justice of the European Union (CJEU) delivered its long- awaited judgement in the Schrems 2 case.

The Court declared that the transfer of personal data from the EU to the US is illegal, because the US does not offer the same level of data protection as the EU.

This is the third time the European Commission has lost before the CJEU on data retention and data transfer to the US – but still it goes on – with serious GDPR consequences and ‘worrying’ concerns about hacking along the chain of transfer from bank to HMRC and across to the IRS.

This newsletter is taken from the pioneering work done in this area by Filippo Noseda, partner in Mischcon de Reya.

The CJEU case related to the transfer of data in the commercial sector. The claimant (a Facebook user) argued successfully that once his data was in the US, it could be accessed by the NSA. This was a commercial case, but exactly the same issues apply to the transfer of personal information to the US under the rules of FATCA and CRS.

In 2010 the US introduced FATCA which requires all foreign banks to report on any US citizen with monies in a bank account outside the US or face stringent withholding taxes. Under these rules, foreign banks are required to send all personal and financial information of any US citizen to US authorities on an annual basis whether or not there is any suspicion of tax avoidance or evasion.

Of course, tax evasion is wrong and should be stamped out, but collating and exchanging personal and financial information regardless of any suspicion of tax irregularity is not ‘necessary’ to stamp out tax evasion and is considered a violation of a person’s fundamental rights to privacy and data protection.

But it is not just that the exchange and sharing of financial information, which is against every person’s fundamental right to privacy, but also the transfer of information exposes the individual to the greater concern of hacking which is in direct violation of the GDPR principles.

Data needs to have strong safeguards, which is what GDPR sets out. Wherever personal data is held and especially if it is to be transferred it needs to be kept safe. The transfer of personal financial data from the bank to HMRC and out to the US IRS does not have the strong safeguards considered appropriate for this sort of information when transferred along the chain to the US.  

Although the Shrems 2 case involves the transfer of information to the US under the FATCA rules there is also extensive exchange of financial information now in place between all OECD countries including all financial centres from the Bahamas to Guernsey, and Mauritius to Zurich, the same concerns arise; – disproportionate intrusion of privacy to stamp out tax evasion and aggressive tax avoidance, and exposure of sensitive personal financial information to hacking and abuse

Filippo Noseda, partner with Mishcon de Reya is passionate about this misuse of power and violation of privacy, and protection of personal financial information. However, Filippo is not just cross about it, he is prepared to do something about it – but needs our help.

With the consent and blessing of his firm, Filippo has started a complaint against the UK tax authorities on behalf of ‘Jenny’ a US born, British citizen who due to her low level of her income could not possibly be avoiding or evading US tax.

This case cannot therefore be viewed as the rich protecting their interests – but at the same time Jenny cannot afford to make a complaint against FATCA without assistance. Mishcon de Reya has therefore launched a crowdfunding page to cover the legal fees.

Funds of £88,000 have already been raised from interested parties but a further £75,000 is needed to launch an appeal before the UK Court by 29th August 2020, at the latest. This is an appeal to anyone who is concerned about abuse of power and the invasion of privacy to contribute to this fund support Jenny who says on her crowdfunding page

 ‘A legal challenge of this type requires an enormous amount of work. It is complicated and untested which means it is hard to predict how it will develop. I have instructed Mishcon de Reya who are leaders in data protection and privacy issues. Dealing with HMRC, without going to Court, is costing several hundred thousand pounds’

I ask you to support Jenny – but we don’t have much time.

For background and further information, click here

Move - while stocks last

Last week someone stole my old, battered, Pashley bike from a bike loop in Hyde Park Square! I was livid.

It was fastened with a bicycle chain, but it obviously was not strong enough to deter the thieves. Bicycling around Hyde Park every day is my way of keeping fit and to steal my bike interferes with my life. I was annoyed. I did not want to buy another bike for another thief to walk off with but did not want to disrupt my daily routine and exercise.

I thought about reporting it to the police – but what’s the point? The police have far more serious things to do than look for my bike.

England and Wales have the highest incarceration rate per capita in western Europe with a prison population of 84,000. Why is this so high?

Part of the problem is to do with a dysfunctional probation system which oversees the release of offenders back into the community.

Probation officers are supposed to meet with released offenders and provide them with – or direct them to – support and advice to reintegrate them into society. However, in the years from 2010 to 2015 HM Prisons and Probations Service had its funding cut by about 20% under austerity measures.

Then in 2015 the coalition government decided to ‘privatise’ 70% of the service. Contracts worth £3.7 billion were awarded to the private sector.

Since 2015, some of these contractors went bust and other contracts were terminated; they were simply underfunded with up to 40% of offenders being supervised - post prison, by a phone call every six weeks.

Figures for 2017-2018 show that the number of offenders on probation who were charged with murder, manslaughter, rape and other serious crimes rose by 21% in a 12-month period.

Joseph McCann was mistakenly released from prison due to probation failures and went on to commit an horrific series of rapes and kidnaps on 11 women and children.

How is this going to impact post lockdown when not only will there be much less money for these probation services to be improved but an influx of people who cannot make ends meet with nothing to do – turning to a life of crime?

Last week Boots announced 4,000 job loses due primarily from a switch to buying online.  What will happen to these 4,000 people and thousands of others like them if they cannot make ends meet, cannot find another job and have nothing to do

The Government needs to stop looking at re-election and start looking at reality.

The backbone of our economy is made up of the entrepreneurs who employ the majority of our workforce – many of whom are our clients. The Government needs to engage with them and make the UK a place where they want to base their enterprise and bring up a family.

Compare life in London where bikes are stolen, and our kids are vulnerable to released offenders - with life on Guernsey.

Podcast Professional - Episode 27

Jo Stoddart, Director of Locate Guernsey is our Podcast Professional for this week, she paints a pretty picture – where the daily commute is a ten minute walk, the evenings can be spent having a BBQ on the beach, houses and cars need never be locked – and parents do not fear that their kids are vulnerable to released offenders.

Remember – it takes just as long to get from the countryside to London as it takes to get to London from Guernsey. Post lockdown – it is not just the green spaces people miss, but also the realisation that they can work and live outside big cities.

Jo of Locate Guernsey says interest in living in Guernsey has never been so high; is this surprising? However, there is one limiting factor. Houses to rent and buy are limited, and demand is high.

So, the message to anyone who wants a better and safer life – ‘move while stocks last’!

In the meantime if you would like to buy my book ‘Reimagining the role of the Private Client Professional – post lockdown’ simply click here, and if you would like to know more about becoming a podcast professional and join Caroline’s Club simply contact deborah@garnhamfos.com

‘Shocking statistics’

In my new book ‘Reimagining the role of the Private Client Professional – post lockdown’ (which you can buy here) I talk about the rich being ‘clobbered’ to pay for the immense debt incurred by Coronavirus – this is certainly the view of Andrew McKenna former head of Compliance and Offshore at HMRC who talks to me on Episode 20 of How to Keep your Money.

Although the full impact of the Coronavirus has still to be analysed the first figures released are shocking. Tax receipts fell by £29 billion to April 2020. The Government received £35 billion up to April 2020, down 42% from £61 billion to April last year.

VAT receipts fell by 107% as shops, restaurants and bars closed and that will only increase as later months are added to this figure. Furthermore, there has been a fall in stamp duty by almost half (43%) with estate agents shut and no viewings permitted.

It is estimated that the Government will be out of pocket by £300 billion following coronavirus. Rishi Sunak is on record as saying that the UK will face the most ‘severe recession the likes of which we have not seen’

So, to cheer myself up - last Saturday I went shopping in Oxford Street – not that I particularly like shopping – but it was exciting to be allowed back into the shops for clothes –not just food – it felt weird. I went to Marks & Spencer, there were amazing discounts– everywhere. I bought a pair of ‘jeggings’ for £7.50 reduced by 50%, a top for £9.50 and some ‘strappy sandals’ for £21.  – Bargains and beautiful!

The retailers have got it right; with warehouses full of merchandise, many people still frightened about public spaces and out of the habit of shopping – retailers know that they need to stimulate interest with fabulous ‘sales’ and ‘beautiful bargains.’

The Government should follow the example set by the retailers. It must first restore confidence – get people back to work and back to spending; oil the wheels of the economy.

Germany, to my mind, has got it right.

This month it announced an Eu20 billion temporary VAT reduction from 1st July to 31st December. The rate will be reduced during this period from 19% to 16%.

This is clever. It is for a limited period only and over the Christmas period which will encourage Germans to spend and to make expensive purchases before the end of the year when the rates go back up. This is what is needed to kick start the economy.

Germany has throughout this pandemic shown to be an efficient, effective and experienced government under Angela Merkel.

The figures speak for themselves. The Germans were 6 times less likely to die from the pandemic than the British. In total Britain had 306,210 confirmed cases of Covid 19 and 42,927 people died, whereas in Germany it had only 190,862 confirmed cases and only 8,895 people died.

In summary, out of 100,000 Britain had 64,27 deaths whereas in Germany the figure is 10.73 according to the John Hopkins University.

Despite our love of the NHS the UK spends only $4,000 per head two thirds of that spent in Germany.

The UK had only 4,000 intensive care beds at the outbreak of Coronavirus, whereas Germany had 28,000. Germany started out doing 160,000 tests a week which rose to 360,000 by mid-May, the UK planned to build its own app which was to be tested on the Isle of Weight but it did not work and had to be scrapped.

Germany has shown it cares for its residents and the UK government needs to do the same. Why should tax residents stay living in a country which does not care for them? Why stay living in a country when its track record on keeping its residents safe is so poor?

The UK Government needs to be clever –use carrots – not big sticks.

Raising the rate of tax is a big stick; tax reliefs are carrots. - Post lockdown people will have proved to themselves they can work from anywhere and will be less concerned about moving out of the country – especially a country which does not care for its residents.

The Government should also give incentives to its entrepreneurs to increase production and get people spending again. It should reverse the reduction of entrepreneurs’ relief back up to £10 million to incentivise entrepreneurs to increase business so that it is worth £10 million before they sell than sell out at £1million. It also needs to incentivise wealthy families to live in the UK and spend in our shops and restaurants.

In my new book ‘Reimagining the role of the Private Client Professional – post lockdown’  which you can buy here, I set out some ideas of how to change the tax laws so that wealthy foreigners can come to the UK – with their money –invest their funds in the UK and give a boost to our financial services industry.

I also go into some detail about how private client professionals should operate a Culture of Care –which I believe the Government should also do, to encourage private client professionals to show some empathy and guidance as they work for their clients

This week’s podcast professional, Zoe Cousens of Castellet Consulting operates a Culture of Care naturally. In her podcast this week she talks about providing financial education to women who may have been recently divorced or widowed, and employees who often spend up to three hours a week sorting out financial problems; time which could be saved with some education on how to budget and put in place a financial plan. To hear more click here

In the meantime if you would like to buy my book ‘Reimagining the role of the Private Client Professional – post lockdown’ simply click here, and if you would like to know more about becoming a podcast professional and join Caroline’s Club simply contact deborah@garnhamfos.com

My book – out now

My book ‘Reimagining the role of the Private Client Professional – post lockdown’ is available for you to buy here now.

Later in the year we will launch a print version, an audio version and a kindle version which will be available on Amazon and in book shops, but for the time being it is available only to you, the readers of my Note as a PDF version.

The book is for the Private Client Professional who cares for his or her clients. This may sound a bit odd but for many Professionals their expertise is of greater importance than their clients, who pay their bills. These Professionals love to jump on airplanes, attend business conferences and have numerous face to face meetings – but post lockdown many will be wondering whether these activities can be justified since they do not benefit the bottom line. Is this activity just a perk of the job; just fun?

All of us have now worked from home; some of us love it, others hate it, but whatever your reaction, what has been exposed is that a lot of what a Private Client Professional does is a waste of time and money; face to face meetings can be done on Zoom, education can be gleaned from webinars and conferences do not produce much if any new business.

However, if we are not to fall back into bad habits, we need guidance as to what to do instead – the silver lining in the dark cloud of covid-19.

What I see is a growing trend to adopt a Culture of Care – being a specialist but also looking after the wider interests of the client to increase the profitability from the client, through cross-selling and upselling – but also to build trust.

Our podcast professional this week Rebecca Bettany Director of JTC Private Office shows how to put a Culture of Care into action.  She talks about the work its private office at JTC has done for its clients during lockdown such as talking to the tenants of properties in their clients’ property portfolio to determine whether they will be able to pay the forthcoming rent during lockdown.

Her attitude is that if JTC does a good job for one part of a client’s investment portfolio her client will be more inclined to give JTC other work – this is a Culture of Care in operation. It is good for business, good for the client and builds a trusted relationship which is good for JTC .

The attraction of what JTC does for its clients is to save its clients time – which Rebecca calls the ‘next luxury’.

Before coming to JTC so many of its clients waste time managing their investments and business investments using out of date spreadsheets. Rebecca speaks of one client overlooking a £50million bank account. I have also known clients ‘forget’ about a street of properties, or missed a Picasso left hanging on the wall behind a door when they moved houses - luckily the new buyer brought it to the attention of the vendor who then retrieved it.

But with the country’s debt now exceeding its economy these oversights – will simply not be excused – tax not declared because an asset was overlooked will not wash with HMRC and will be payable together with up to 200% penalties! If you do not believe me listen to Andrew McKenna’s podcast Episode 20 former head of HMRC compliance and offshore to learn more

We owe it to our clients to look after their wider interests. Rebecca is a podcast professional on ‘How to Keep your Money’ because if I come across a client who has his or her investments and assets managed on a spreadsheet I will warn him or her of the dangers and introduce him or her to Rebecca who can sort out the muddle which I cannot.

This is what I call a Culture of Care. To do this effectively each of us needs a small actively managed network – what I call my A network  to whom clients can be referred and from whom I expect to be introduced to clients as well.  As I explained in last week’s Note, I started my podcast series ‘How to Keep your Money’  to put together in a dynamic way my own A list of Professionals; the Professionals with whom I wanted to do business. Post lockdown this has now lead to Caroline’s Club – which will give you the tools to network remotely with a matched group of Professionals and zoom speed networking to put this into practice – we aim to launch it towards the end of July

In the meantime if you would like to buy my book ‘Reimagining the role of the Private Client Professional – post lockdown’ simply click here, and if you would like to know more about becoming a podcast professional and why it will be of benefit to your business simply contact deborah@garnhamfos.com or phone 020 3740 7422