Forms of business vehicle

It is important that the most appropriate form of vehicle is chosen to carry on a business. The choice of vehicle may have a bearing on the business's success or failure.

There is not one vehicle that will suit the needs and demands of every business. Each vehicle has its advantages and disadvantages. The decision as to which vehicle to use to carry on a particular business will be complex and dependent on various legal, tax and commercial considerations—there may not be a perfect fit.

In addition, the vehicle originally chosen to carry on a particular business may not continue to be the right choice of vehicle for that business as it develops and matures. The vehicle chosen to carry on a business should be kept under periodic review. If the original choice of vehicle to carry on a business becomes inappropriate, an alternative vehicle may take over the business, although a change of vehicle may be complicated and costly, depending on the circumstances.

Key factors that may be relevant when trying to identify the form of vehicle that is most appropriate to carry

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All in? Court confirms when a settlement is 'made' for the purposes of excluded property (Accuro Trust (Switzerland) SA v The Commissioners for HMRC)

Private Client analysis: This case considered the meaning of 'relevant property' under the settlements regime of the Inheritance Tax Act 1984 (IHTA 1984) and, in particular, the time at which this definition is to be tested. The question arose as to whether the trustees of an offshore trust established by a non-UK domiciled settlor were subject to the UK settlements regime in respect of property added to the trust after the settlor became deemed domiciled in the UK, or whether they were exempt from such charges as the trust consisted solely of excluded property. The First-tier Tribunal (FTT) held that whether trust property is excluded property is based on the status of the trust at the time that it was established, not at the time that the property in question was added to the settlement. As a result, the trust in this case did consist solely of excluded property and no inheritance tax (IHT) charges arose as a result of either the ten-year anniversary or capital distributions. The FTT was also asked to consider whether their jurisdiction was appellate, or supervisory only. The FTT held that, while their jurisdiction was supervisory, the questions raised by the trustees were relevant in establishing whether HMRC had acted reasonably and that the outcome (ie that the paid IHT should be refunded and that no further IHT was due) would be the same in either case. Written by Katherine Willmott, senior associate solicitor at Foot Anstey LLP.

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