BR Report 2019

FOREWORD DISCLAIMER This publication is not included in the CLA Licence so you must not copy any portion of it without the permission of the publisher. All rights reserved. No parts of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means including electronic, mechanical, photocopy, recording or otherwise, without written permission of the publisher. This publication contains general information only and the contributors are not, by means of this publication, rendering accounting, business, financial, investment, legal, tax or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional adviser. Neither the contributors, their firms, affiliates nor related entities shall be responsible for any loss sustained by any person who relies on this publication. The views and opinions expressed are solely those of the authors and need not reflect those of their employing institutions. Although every reasonable effort has been made to ensure the accuracy of this publication, the publisher accepts no responsibility for any errors or omissions within this publication or for any expense or other loss alleged to have arisen in any way in connection with a reader’s use of this publication. This publication is based on the authors’ understanding of the structure of the arrangements detailed, the current tax legislation and HM Revenue & Customs practice as at March 2019 which could change in the future. It is not an offer to sell, or a solicitation of an offer to buy, the instruments described in this document. This material is not intended to constitute legal or tax advice and we recommend that prospective investors consult their own suitably qualified professional advisers concerning the possible tax consequences of purchasing, holding, selling or otherwise disposing of shares in Business Relief-qualifying companies. Intelligent Partnership is not authorised and regulated by the Financial Conduct Authority and does not give advice, information or promote itself to individual retail investors. It is the responsibility of readers to satisfy themselves as to whether any arrangement contemplated is suitable for recommendation to their clients. Tax treatment depends on an investor’s individual circumstances and may be subject to change. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors. Welcome to the fifth edition of the annual BR Industry Report There’s no doubt that these are turbulent times. In the last few months, a cocktail of global geopolitical concerns has shaken investor sentiment and stirred markets. But there’s still a good case for BR. The UK government is focused on maximising tax receipts and it sees tax simplification, especially in IHT, as an essential way of closing the tax gap. Yet, the Office of Tax Simplification has described BR as working in a straightforward way. Unlike the residence nil rate band. Meanwhile, we’re seeing the ongoing introduction of measures aimed at driving growth in UK businesses. That requires funding and we already know that BR has been identified as a meaningful contributor to patient capital. With IHT forecast to keep on growing, there promises to be a continuing stream of clients for whom BR could save 40% tax while supporting the UK economy. But there are challenges. AIM reminded us of just how volatile it can be at the end of 2018, steeply cutting valuations and bringing with it negative performance for AIM-focused BR managers. Of course, market volatility is nothing new, but given current conditions, more volatility is expected, at least in the short term, raising questions about recommending an investment option for tax mitigation in uncertain times. On the flip side, overall medium to long term BR performance remains impressive, diversification is up, undervalued stocks are bringing great opportunities and some sectors remain notably robust and well- placed to take advantage of the circumstances. I hope that this report gives you a thorough understanding of the current BR landscape, and gives you greater confidence in advising on these investments to your clients. Our ‘Adviser’s Guide to Business Relief’ is also available as an everyday reference guide to the practicalities involved, including case studies, rules and technical tips. GUY TOLHURST Managing Director Intelligent Partnership Editorial Lisa Best Creative Mar Alvarez Estela Alcay Sub-editing Lisa Best Research Lisa Best Alan Sheehan Van Li Marketing Michelle Powell Andy Binkiewicz Print Palina Limited Copyright © Intelligent Partnership 2019 ISBN: 978-1-9993343-3-8