While Northern Ireland’s family owned businesses continue to deal with the impact of the coronavirus, it is important to reflect on some matters that require the attention of those seeking to balance the health and wellbeing of their employees and family members with the impact on the family business itself, and the potential implications of the pandemic on family wealth.
Kevin Bell, Private Clients partner at KPMG in Northern Ireland, reviews matters related to family wealth and the impact that the pandemic can have on choices for family members. It is increasingly clear that the impact which COVID-19 has on the way we think, and act will be both far-reaching and enduring.
Just as market uncertainty presents challenges for a family business, it also poses important questions around how it will affect the value of family wealth and assets. The safety and wellbeing of family members and employees will be paramount, but as the crisis develops and passes, it remains important to monitor and manage not just family business interests but also family wealth more generally, including non-business assets.
Below are some considerations that should be borne in mind when faced with volatile markets and uncertain asset values.
Just as key management risks in a business include the need for new decision-making processes and controls when pivotal employees are unable to work, contingency plans and quick responses are just as critical when managing family wealth.
Now is the time to test governance mechanisms you have put in place for decision-making and communication, to assess the durability of the digital and human infrastructures and test the strength of your contingency plans to be best placed to preserve and protect family wealth and assets.
Making choices for the safety and wellbeing of your family during this time, or just the practical impact of travel restrictions, may take some people away from their usual location.
Each country has its own laws for determining when an individual is a resident for tax purposes. For those who are tax resident in more than one country, the country that has the taxation rights over specific types of income is governed primarily through double-taxation agreements and related protocols.
As the COVID-19 travel restrictions to and from the UK continue to have impact, many individuals are concerned about the impact the additional unplanned days spent in either the UK or overseas will have on their tax residence status.
HM Revenue & Customs [“HMRC”] has published guidance on how certain aspects of the Statutory Residence Test will apply when individuals are displaced due to COVID-19.
Individuals and families living across a number of destinations will be familiar with the need to maintain clear and ordered evidence of their taxable presence in a country. This could include the total amount of time spent in that country; how much of that time was at their home; the number of days they spent working; and several additional factors all depending on each country’s specific residency requirements.
Now may be the time to review such plans or consult with your family business advisor to consider the below possibilities:
Individuals should consider their plans in light of specific legislation in each relevant jurisdiction and gather appropriate evidence to ensure they are clear on their tax residence position and globally compliant.
Health, wellbeing, and safety will continue to supersede all other concerns as we navigate these days of unprecedented change and unpredictability. However, this too will pass and to help prepare for a stable future it may be worth considering some actions that you can take now to reduce the longer-term economic impact.
Our KPMG in Northern Ireland Private Client Team understands the potential consequences of the current global health situation for family offices, businesses and entrepreneurs including how COVID-19 may affect both strategic and shorter-term operational issues. We can help you navigate your business and family through these unprecedented times.
For further information on family wealth matters, please contact: