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e-mail : croxtons@informedinvestor.co.uk |
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Fax : +44(0) 845 862 1954 or CONTACT US CLICK |
The
Informed Investor began publishing from offices at 13 Nottingham Place,
London, W1 ( See Picture Left) in 1972. It started as a printed
publication for Drummond & Co offering Investments and Insurance.
Long before today's regime in regards commissions Drummond & Co
pioneered discount selling of Linked Insurance and Unit
trusts-
splitting the commissions with the purchaser. Many in the Industry
condemned this and many leasing Insurance Groups refused to take their
business. Most of those companies have gone out of business today &
Drummond & Co are recognised as the Company that led the way. Today
38 years later Drummond & Co still lead the firld in Financial
Innovations and have advised both the public and professionals.
As Financial Commentators the Informed Investor have, over the years, Informed Investors about dangerous offers and Financial mis-doings sometimes years before the scandals broke. This we continue to do through our many websites. In 2009 over 79 million visits were made to our pages and over 40 million so far in 2010. |
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THE ORIGINAL NIC FREE, VAT FREE, RESTRICTIVE COVENANT FINE WINE SCHEME FOR DIRECTORS, EXECUTIVES AND EMPLOYEES FROM £5000 This scheme operated between November 1996 and July 1997 and was administered by Croxtons Ltd. It was the second Grapevine Scheme as there had been a " benefits in kind" scheme operating between November 1991 and August 1994. Croxtons also ran a Restrictive Covenant Scheme utilising gold instead of fine wines. |
This scheme is ideal where a
Company wishes
to compensate a director,executive or employee for signing a
Restrictive
Covenant and achieve a saving in the National Insurance Contributions.
Is in Fine Wines placed with a reputable company. Security of the monies is imperative. £5,000 LEGAL CHAPTER & VERSE a) Section 4 (4) Social Security
Contributions
Act 1992 treats as b) None of the measures introduced
at Reg
19(5) ( which includes schedule |
As explained payment for a
restrictive covenant
is only brought within the definition of earnings if it takes the form
of money and consequently none of these measures can apply.It follows that the restrictive covenant scheme will in fact succeed for NIC purposes with any of the assets caught by Reg 19(5) and schedule 1A. As Section 313 TA88 treats
consideration
for a restrictive covenant as an emolument of the employment it is
considered
that this source of income will rank as relevant earnings ( section 644
TA88) and as a) The leading case concerning the
tax deductibility
of restrictive In regards using the Restrictive
Covenant
Scheme the following shouldbe noted: 2. It is not advisable to write a Restrictive Covenant for a Director who owns in excess of 70% of the company’s shares. 3. If the Director wishes to obtain
payment
over a period of time |
MAGNUM FINE
WINES PLC
The wines are purchased through
Magnum Fine
Wines plc, with whom we have had a long and fruitful relationship since
1991 and who provided Established in 1985, by
professionals with
a long history in the wine trade, they also have the expertise of an
independent
consultant, David Peppercorn, a master of wine since 1962 and the
author
on the definitive book on Bordeaux wines. Companies investing up to £99,999 = 2% Companies investing £100,000 - £499,999 = 1.5% Companies investing £500,000 - £999,999 = 1.25% Companies investing
over
£1 million = 1% The above charges are free of V.A.T as the wines are held in a U.K.Bonded warehouse. However there is a small extra
charge to cover
ocumentation, If professional advisers wish to
have their
fees added to the cost they should inform the amount when placing the
order. A Company should seek confirmation from their own advisers. Croxtons Ltd. and the suppliers cannot accept responsibility for the information contained herein E & O.E. 01/11/96 |
PROCEDURE
1) The Wines will be registered in the client’s own name. 2) They are secure and maintained in the correct conditions to matureproperly and improve with age. 3) Neither VAT or duty on wine kept or sold in a bonded warehouseis paid unless it is cleared for drinking. 4) It is simple
to transfer
the ownership of the Fine Wines to theEmployees without incurring stamp
duty or VAT. In order to acquire Fine Wines on this basis, we would recommend thefollowing process: 1) The Company
purchases a number
of cases of Fine Wines. 2) At a later date the Company holds a Board meeting whereby the Board Directors resolve to give the Employee(s) by way of cases of Fine Wines consideration for signing a Restrictive Covenant. 3) The Employer
writes to the
Employee informing him of the board's decision to offer Fine wines in
consideration
of a Restrictive Covenant. |
4) The Employee writes to the Employer agreeing not to compete withthe Company within ... miles of ............ within one year as a Restrictive Covenant. 5) On receipt of this letter the Employer should complete an instruction to transfer ownership form authorising the transfer of ownership to the Employee. 6) Should the
Employee wish
to sell all or a number of his cases of wine he/she is perfectly at
liberty
to do so. This sale may be to other individuals, auctioneers or traders
in Fine Wines including MAGNUM FINE WINES PLC. Should he/she
decide
to sell to MAGNUM FINE WINES PLC then a form authorising the
sale
and giving instructions as to the payment of the proceeds of sale
should
be signed. Various documents
covering the
transactions will be issued by MAGNUM FINE WINES PLC, the
proceeds
of sale will normally be sent by CHAPS to any authorised bank account
in
the UK, within 48 hours of the completions of the transaction.
The above
information is based
on our interpretation of the regulations.You may wish to seek
confirmation
from your own advisers. Croxtons Ltd
and MAGNUM FINE WINES PLC cannot accept responsibility for the
information
contained herein. |
(to
be completed on Company Headed paper)
From. . (Company Address) ............................................................
.............................................. Signed..........................................
Signed...............................................
Date ................................... * Before filling this in, ask us the quantity of cases necessary for the amount required to be invested. |
XYZ Trading Company Ltd. Minutes of Board Meeting Held on Thursday
28th November
1996, 2 pm. at Headquarters, Principal Those present:
Employee
No. of Cases of fine wines as (a)John Tonic .......................................................................... (b) Mary Gin ......................................................................... .
(Specified
Individual) was authorised
to instruct MAGNUM FINE WINES Chairman |
(to be completed on Company Headed Paper) Date...........................
Dear
............................ |
LETTER FROM EMPLOYEE TO CLIENT COMPANY ACCEPTING RESTRICTIVE COVENANT AND FINE WINES ( to be completed on plain paper, with the Employee's name and address) Date...................
(The Employee) (Example Covenant) |
( to be completed on Company Headed paper) INSTRUCTIONS TO TRANSFER OWNERSHIP Date ..............
From
........................................
(Employer) Name of
Employee
Details as per Number of cas es b} c) d) e) f) For and on behalf of : (Company Name) Signed Signed |
(To be completed by the Employee on plain paper, with the Employee’s name and address)
INSTRUCTIONS TO SELL From
............................(Employee’s
Name) or (b) I would like to retain the following cases of Fine Wines which are held as detailed below - please sell the balance: No of
Cases
Nameof Wine as per invoice
Full Name of Beneficiary Address where payment to be sent . . Signed ( Payments may be
made direct
to the Employees bank account. If required please complete the
form
inserting the Bank, Sort Code, Address and |
Croxtons’ RESTRICTIVE COVENANT PLAN |
by David Ewart, Pump Court Chambers, 16 Bedford Row,
London, WC1R 4EB 16th July 1996 1. The following
arrangements
have been suggested as a means of making payments to employees without
a liability to national insurance contributions (“NIC”). In
consideration
of a payment in, for instance, fine wines by the employer, the employee
will give an undertaking that he will not disclose or publish any
information
and/or techniques used by the employer and will not divulge the details
of any customer for 2. The first
difficulty is that,
as a matter of law, all contracts 3. The position is
different
after the termination of the employment. At that time the only implied
term is that the ex-employee will not disclose the employer’s trade
secrets
: Faccenda Chicken-v- Fowler [1986] ICR 297. Therefore, there could be
some value in a covenant not to disclose confidential information other
than trade secrets. Alternatively, one could have a covenant not to
compete
with the ex-employer in a certain area within a certain time of the
4. My other concern
is that
an undertaking not to disclose confidential information while still
employed
might be remuneration derived from employment on general principles
i.e.
without reference to SSC & BA 1992 section 4 (4). TA 1988 section
313
was introduced to reverse Beak v Robson (1943) 25 TC 33.
In Beak the taxpayer was paid £7,000 to enter
into
a covenant that he would not compete with his employer |
In the present case, the employee would be giving the consideration under the covenant during the period of his employment. It is clear since Hamblett-v- Godfrey (1987) 59 TC 694 and Bray -v- Best (1989) 61 TC 705 that a payment can be an emolument from a taxpayer’s employment although they are not a reward for services: see Wilcock -v- Eve [1995] STC 18, at 25f-g. It seems to me that a payment for a covenant relating to a taxpayer’s employment, given during the employment, is an emolument from that employment. It is similar to the
payment
for giving up right connected with the 5. I would therefore
advise
that the employer ought to make its payment in return for a covenant
that
the employee will not compete within a certain area and during a
certain
period after the termination of the employee’s employment.
6. I agree that a
payment in
kind for a restrictive covenant will 7. For income tax purposes, the transaction clearly falls within TA1988 section 313. The assets will be “tradable assets” as defined in TA 1988 section 203F(2) and so PAYE must be applied. |
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It's well worth the money |
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