We are having more conversations about inheritance tax, now that the effect of the proposed changes to Business Property Relief (BPR) is starting to sink in.
With the negative business environment which the government is perceived to have created, various clients and prospects have asked us about, shall we say, some creative ideas they have about their business structure.
Now, we are all for minimising tax as anyone who reads our posts will know.
But sometimes, we just need to step back and think about what could be the unintended consequences of what is proposed.
There is the ongoing joke that the Royal Mail is a pension scheme with a postal service attached.
Could you be making an Inheritance Tax or other Tax scheme with a business attached?
Remember that splitting or complicating your business structure can lead to:
🔹 Increased complexity in the running and governance of your business
🔹 Potential conflicts between different entities
🔹 A need to make the invoicing and put the cash in the correct places
🔹 Reduced flexibility for future business changes
🔹 A similarly non-simple view that your customers and clients will see
🔹 Increased professional fees
And after all that, the whole thing may not work anyway if HMRC deems that what you have done is really just an artificial paper construct for tax purposes only.
Sometimes, you just have to say to yourself, “I am going to focus on making my business as profitable as possible. I am never going to like the amount of tax I pay. But, I am going to take the many simple and very legal steps and actions to maximise the amounts of my profits withdrawal and what I pass on to the next generation.”
It depends on how much tax you are saving and its risk profile, of course. However, what do you think?