Halifax lawyer Michael Gledhill has helped persuade the government to do a U-turn on its plans to close a tax loophole that would have cost his client millions of pounds.
Gledhill, senior partner at eight-partner firm Finn Gledhill, acts for members of a family who last October received millions of pounds on the maturity of their discretionary trusts under a well-recognised tax loophole, used frequently by tax planners.
The draft Finance Bill, published on 5 December, indicated for the first time that tax credits on this sort of share buy-back would no longer be available and would be eliminated retrospectively from 8 October 1996. It would have meant Gledhill's clients paying back 10 per cent of their fund in tax.
“What's the point in people like us doing tax planning when the government can come along and close all the loopholes retrospectively?” asked Gledhill. “We may as well all go home.”
Gledhill and his client's accountant, Tim Parr, of Clark Whitehill Josolyne, lobbied their local Conservative MP, Gary Waller, and Labour MP, Alice Mahon, on the issue. Cornish pasty maker Samworth Brothers also lobbied the Commons, and the Tax Faculty of the Institute of Chartered Accountants took up the cudgels in a lengthy critique of the Finance Bill.
The pressure worked. On 23 January the government accepted an amendment to the Bill tabled by three MPs, including Waller, which will close the loophole from December 1996.