Dawn Register, partner in tax dispute resolution at BDO, says: “Landlords seem to have been hit by so many tax changes, that a lot of private individuals will need both tax and financial advice.
“If so, do they want to change their investments because of that?”
The UK is due to hold its next Budget on March 11.
The last time the UK had a Budget was in 2018, as the Budget last year got delayed when Boris Johnson announced he was going to hold a general election.
We would like to see some simplification in pensions and inheritance tax,Landlords already suffered a number of changes in recent years. The 2018 Budget brought in a stamp duty surcharge for international buyers, among other measures, while previous Budgets had similarly tightened tax screws on landlords.
Buy-to-let landlords suffered another blow with former chancellor Philip Hammond’s announcement that from April 2020 lettings relief will be reformed.
Lettings relief helps lower capital gains tax on the sale of a property that was at some point used as the seller’s residence but has since been let out as residential accommodation.
Under the previous private residence relief system, the owner gets relief on the years they have lived in the home and on the last 18 months they owned the home, even if the person was not living there in that time period. This is now being lowered to nine months.
Tax simplification
Ms Register calls for a simplification of the UK tax system and predicts that sweeping reforms will happen to the UK’s Enterprise Investment Schemes.
“We would like to see some simplification in pensions and inheritance tax, [we] would like to see the tax system supporting entrepreneurs.”
At present, one can only apply for EIS manually.
“Being able to apply for EIS status online [is a necessary change required to simplify the system],” she says.
“Small and medium-sized companies are the lifeblood of the UK economy and we would like to see the tax system continue to support that,” she adds.
Foreign income
According to Ms Register, one of the biggest themes facing the financial advice industry will be how advisers deal with clients who have foreign income.
“The area that HM Revenue & Customs and I see a lot is people with foreign income and making sure that is correctly reported by the individuals on their tax returns.”
She refers to the common reporting standards, an information standard for the automatic exchange of information regarding bank accounts between the tax authorities in a number of countries and how it has made it more important for advisers to currently identify where clients’ investments are domiciled.
“We had a lady who got a letter from HMRC, which said, ‘We think you have a foreign income gain’.
“I spoke to her IFA and actually her pension fund is held in Dublin; [though] it looked like a UK provider, the Irish authorities transferred information back to HMRC.”
Ms Register says she faced a similar scenario with another client who holds an investment in a life bond based out of the Channel Islands.
“Everybody has an emotional reaction when being accused of doing something wrong – sometimes it is anger, sometimes it is fear,” she says.
Adviser by trade
Ms Register is a financial adviser by background. She worked as a tax manager in Baker Tilly before she joined BDO in 2006. Prior to this, she was a financial adviser for Chase de Vere.
What prompted her move out of financial advice?
“It is very important to get both good financial advice and good tax advice,” says Ms Register.
She adds that during her time as a financial adviser she realised that a lot of clients she worked with were seeking tax advice as well as financial advice.
“I actually had a period where I worked with private clients first, so I guess it is very natural that you are advising families or clients or both, so I went back into giving private client tax advice.”
Necessary skills
Ms Register shares the view that there is a lot of support in the industry to gain technical knowledge but it is often harder to gain the communication skills to do the job.
“There is a lot of support for acquiring tech knowledge, but the difficult parts of the job are [gaining] the meeting skills, mediation skills and communication skills.”
Acquiring these skills early is often a huge challenge faced by those working in the industry, she adds.
Ms Register says: “The UK’s tax legislation system is one of most complex. We have 21,000 pages of tax law.
“The chances of getting it wrong are quite high, even if you have an adviser.”
She notes the proudest moment of her career was winning the partner of the year title at the British Accountancy Awards in 2018.
Ms Register says growth is the focus of the next few years at BDO as it only recently merged with Moore Stephens.
Ms Register says one of the biggest challenges of her job is proving innocence when HMRC has accused individuals of things they have not done.
“Trying to prove a negative is quite a challenge when the tax authorities think somebody has done something wrong.
“The other challenge is we do have a tax authority with limited resources,” she says.
Saloni Sardana is a features writer at FTAdviser and Financial Adviser
