No, I'm not talking about Alternative Investment Markets (although they can form part of tax planning). Rather I'm looking at the three key components that should be involved in any tax advice that you receive, which are the three steps of the process to make sure that good advice actually works for you, rather than just being good advice. It was Oscar Wilde who said "I always pass on good advice, it is rarely of use to ones self.".
A) Of course, the first step on the path to mitigating your exposure to any form of taxation is advice, and its usually where the process for many clients starts, and unfortunately ends. Good advice should look at your tax affairs in the round, and not just the tax problem you thought you had when you walked through the door. Almost all of the direct taxes (income, capital gains, inheritance) and some of the indirect taxes (VAT, stamp duty) interact at some level on any transaction, and you ognore the other areas of tax at your peril. If your accountant or tax adviser isn't doing this, get a new one. Also, rather than focussing on the problems, is the advice you're getting offering solutions rather than just telling you what the bill is?
I) Okay, if you got to this step we've established that you're getting the right advice. I stand for implementation. Normally, after seeking out the tax advice, part of the solution you have is to put in place some sort of structure, be this a will, a trust, a company or another legal entity. So, what happens next, your tax adviser sends you off to your lawyer, or recommends one to you. You need to make sure that your tax adviser and lawyer are talking to one another so that the advice is correctly interpreted and implemented by the lawyer. Also, is your lawyer a specialist in that field? If not, I heartily recommend you seek one out.
M) Right, we've done to most what seem like the most important parts of the process in tax advice, time to put your feet up now yes? Wrong, the most important part of dealing with a tax issue is M for management. If the advice you receive isn't reviewed from time to time, it might no longer work, or have been rendered irrelevant by retrospective legislation. If you don't fulfil the legal requirements of say a trust, it can be shown to be a sham by the tax authorities (or worse by the divorce courts). Its important to ensure that you keep getting the right advice, as tax advice isn't a band-aid one time fix, its a constantly evolving process that involves your accountant, tax adviser, lawyer and financial adviser.
Even if all of these steps are in place, you can still hit rocky shores if your advisers don't talk to each other, or simply don't understand what one another are trying to acheive. Where possible try and include all parties in the initial advice, or better yet look for someone who can fulfil the role within one firm (we are out there!). So in order to ensure that your aims and desires are followed through, make sure you take AIM at your tax affairs and act on the advice you receive!
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