July 17, 2018
Some entrepreneurs are fresh out of education, bursting with ideas and raring to go. Some are in their middle years, balancing running a business with the demands of family life. Some are looking towards retirement and wondering who will take up the reins when they step down.
Put six entrepreneurs around a restaurant dining table and they will probably all order something different. Put them at the top of a mountain and they will all find a different way down. Put them in front of a group of prospective employees and they will all, most likely, pick someone different for the job.
Having said all that, every business owner in the UK is subject to the same regulatory requirements, whoever they might be.
Our six entrepreneurs sitting around the table might all have different strategies, goals and motivations, but ultimately they would all be subject to the same penalties were they to get it wrong.
Such penalties can ruin a family or put a business into liquidation.
Everyone is familiar with the level of regulation applying to companies, but what we are now seeing is more and more regulation creeping into the personal and family sphere (including some which affect trustees). Here is just a taste of some of the new rules that have come into play in the last few years:
General Data Protection Regulation (GDPR): Everyone has seen the emails, but GDPR is about more than updating your privacy settings and unsubscribing from spam emails. The rules do not just apply to big business either. Almost anyone in a position of responsibility holding personal data (including trustees and personal representatives) will need to take action as a result.
The Trust Registration Service (TRS): This came in last year and requires trustees of many trusts to provide certain information to a central database held by HMRC. Aimed at avoiding money laundering through greater transparency, TRS places a further regulatory burden on trustees. At the moment, TRS is only accessible by law enforcement agencies and not the public, but this might be about to change with a new EU Directive which could put this private information into the public sphere for the first time.
The Foreign Account Tax Compliance Act (FATCA): This US law has had implications for UK trusts and estates since 2014, whether or not there are obvious US connections. In many cases, registration is required and information needs to be filed with the IRS and/or HMRC on an annual basis.
People with Significant Control (PSC) register for companies: UK companies must now identify and record people who have significant control over them. This applies to trustee shareholders too, who can sometimes be required to disclose information about underlying beneficial ownership.
Non-compliance with any of these regulations can lead to severe financial penalties and bad press for the individuals or businesses concerned.
So, what can be done? How to avoid profitability suffering while you and your business deal with the ever-increasing burden of regulation? The answer is simple: make sure you have the right advice from people who have a deep understanding of the new requirements. If they are doing their job properly they will demystify, rationalise and deal with whatever it is that is giving you a headache.
As a full-service firm of commercial and private wealth advisors, Womble Bond Dickinson – together with our financially regulated subsidiary Womble Bond Dickinson Wealth Limited – can deliver bespoke advice and support you, and your business, to stop the dreaded spectre of penalties from rearing its ugly head and, most importantly, allow you to carry on doing what you love.
I didn’t mention the seventh person at the dining table. That was the adviser making sure the other six didn’t leave by mistake without paying the bill!