HEADLINES [click on headline to view story]:

Family Money

Personal Directions

The Doctor's Consultation by Dr. Iain Corness

Agony Column

Camera Class by Snapshot

Recipes from Rattana

Battling the Crab By Leslie Wright

Family Money: UK Property: The Tax Issues

By Leslie Wright,
Managing director of Westminster Portfolio Services (Thailand) Ltd.

I’m asked all the time about the tax implications of owning UK property. It can be a minefield if not properly planned and structured. The impact, not only of income tax, but inheritance tax, capital gains tax, corporation tax and stamp duty have to be considered.

Inheritance Tax (IHT): Many people think their spouse can inherit everything without paying UK inheritance tax. Not always. If the deceased is deemed UK-domiciled for IHT purposes but the spouse is not, the spouse’s exemption is limited to ฃ55,000 above the nil-rate band (now ฃ250,000).

Foreign domiciliaries are subject to UK IHT on assets in UK. So, if a foreign domiciliary owns UK property in his own name, the personal representatives of his estate will have to obtain a grant of probate/administration in the UK to obtain title to the property, which is subject to 40% UK IHT above the spousal exemption and nil-rate band. This can be a slow and costly process. Furthermore, the estate can be exposed to public scrutiny, Inland Revenue investigation and legal claims in the UK.

Capital Gains Tax (CGT): UK resident non-UK domiciliaries (e.g., Thai wives living in UK who’ve acquired property there) are liable to CGT subject to the application of main residence relief exemption and non-business asset taper relief. Main residence relief only applies to one property and married couples can only claim the relief on one property.

Income tax: Rental income is subject to UK income tax, for residents and non-residents alike. The expenses of the property including mortgage interest payments can be offset against the rent - but only if the mortgage was incurred either to purchase the property or to raise money for the cost of maintaining it. Taking out a mortgage at a later date in order to reduce income tax will not work.

A further income tax concern arises with regard to shadow directors - particularly since the case of R. vs. Allen. A shadow director is someone who is not a director of the company but has real influence in the corporate affairs of the company - in other words, gives directions to the board which are routinely followed. A shadow director who receives benefits in the UK (such as rent-free accommodation) will be liable to income tax on the value of the benefit.

Ownership of property in the UK will result in a UK-resident individual becoming ordinarily resident in the UK, which may adversely affect their income tax status. Individuals wanting to preserve their not-ordinarily-resident status should consider purchasing a property indirectly.

Corporation tax: If the central management and control of an offshore company is conducted in the UK, gains made by the company on the sale of the property will be subject to UK corporation tax. It is common for foreign domiciliaries to purchase property through offshore companies and then to treat the property as their own - for example, instructing estate agents and accepting an offer and then directing the company to complete the sale. This sort of improper conduct can lead to real problems with the UK IRD.

Stamp Duty: Stamp duty is charged at 4% for properties over ฃ500,000. However, if the property is owned by an offshore company, sale of the shares in the company rather than the underlying property will not give rise to a stamp duty charge.

Methods of Ownership

Direct ownership: This is the most straightforward route. A UK resident can rely on main residence relief to avoid capital gains tax. The significant concern remains inheritance tax.

Inheritance tax can be minimised by taking out a mortgage on the property, which reduces the taxable value of the property. If the mortgage is provided by an offshore provider, UK residents can use offshore income to pay the interest without remitting income to the UK.

The other alternative is term insurance. This is particularly attractive if the purchaser is young and healthy. The policy should be issued either by an offshore provider or by a UK provider under seal and kept outside of the UK; otherwise any payment under the policy will fall into the UK inheritance tax net.

Mortgages and insurance are sometimes simpler and cheaper than an offshore company/trust structure, so may be useful if the property is worth less than ฃ5m. However, if the property is very valuable, the insurance premiums or interest payments will be very high and short term costs may outweigh the long term tax benefits. In these circumstances, the offshore company/trust structure should be considered.

Leaving property to a UK-domiciled spouse can shelter it from inheritance tax. If the surviving spouse sells the property and takes the proceeds of sale outside of the UK this may remove the proceeds from the UK inheritance tax net. The risk is that the surviving spouse may not have an opportunity to sell the property. A second-death insurance policy would protect against this eventuality.

Trusts: Holding a property through an offshore trust will shelter the property from UK capital gains tax if the settlor is non-UK domiciled. This structure is therefore useful if main residence relief does not apply (for example, because it’s a second home).

However, a property owned directly by a trust will not shelter the property from UK inheritance tax. So, holding property through a trust will require the addition of a mortgage or insurance cover, use of the spouse exemption, or the incorporation of an intervening offshore company to reduce inheritance tax liability.

Offshore company: If used correctly, an offshore company can shelter the property from inheritance tax, capital gains tax and stamp duty, avoids the need to obtain a grant of probate/ administration, and maintains a high degree of confidentiality. However, the legal ownership of the company must be respected and central management and control of the company must be exercised outside the UK. Company directors must evidence their decision-making process through board minutes of meetings occurring outside of the UK. If the directors have no knowledge of the underlying property and always act on instructions, central management and control is likely to be a serious issue.

In conclusion, no single structure is suitable for every situation: careful planning must be undertaken, and adapted to the circumstances.

Personal Directions: Handling phone calls ... handling complaints ... leave a lasting impression

By Christina Dodd,
founder and managing director of Incorp Trining Associates

Most conversations we have in this modern age are over the phone. Just take a look around you in your workplace, at home, while you are walking down the street, while you are boarding the skytrain or on the ninth hole! In fact, almost everywhere that you turn you will see someone using a telephone; that marvellous little invention that has turned communication, and the “art of communication”, upside-down and inside-out and whichever other way you care to name.

We have become so used to the telephone as a means of communication that we have, in many ways, forgotten how powerful a tool it can be, particularly when doing business. I say this because like you, I too have been totally amazed and disappointed, and at times angered, by the lack of basic telephone etiquette that exists in many businesses today. Companies seem to be more concerned with acquiring the most complicated automated answering systems than with having human beings on hand to serve their customers’ needs and enquiries.

I spent a very long day not so long ago trying to get some answers from a company (and a rather major one at that) about a product I had bought. Well, this company’s automated menu must be about the longest one in history and if you have the memory of an elephant then you’d probably work it out and actually get through to a human voice after a while. I did manage to break through after numerous attempts and study of the instructions, and after experiencing enormous levels of frustration and stress which immediately put me into the “hostile caller “ category.

This type of situation happens so much of the time and it really can be avoided if companies seriously consider the caller first - and then install simple but efficient and personable systems to connect them to the appropriate “people”. Automated systems can be a great help if they bear in mind that the caller is not a machine!

Whenever I train people in improving telephone skills and techniques, one of the main points that has to be stressed to them is that the moment they speak, the first image they convey over the phone, is the first impression the customer or caller will get and it will be the one they will always remember.

The telephone requires us to be more aware of our voice than at any other time. Callers - customers - cannot hear our facial expressions or our overall physical appearance, but they do form a mental picture of us based upon the tone and quality of our voice. Our mood - smiling and happy or frowning and angry - more often than not will come through. It is wise to never under-estimate human perception and the ability of the person on the end of the line to sense attitudes. That’s why, before we ever pick up a telephone, we should take a moment to be sure that we are mentally prepared to deal with the customer on the other end.

A pleasant phone voice takes practice and speaking in well-modulated, pleasant tones is a learned talent. If you want to assess your speaking voice tape yourself talking on the phone then ask an honest friend or colleague to evaluate your vocal quality. Better still, have someone tape you from the listener’s end so you can really hear how you sound to your customers. By the way this is a good exercise for everyone to do because it can immediately highlight problems that may exist and in no way can it disguise the areas that need improvement. It is a dramatic and honest method of feedback which is highly useful.

Some people I have done this with have never heard themselves audio taped before and have been surprised and even shocked at the way they sound! I tell them not to let it bother them because we all sound strange to ourselves on tape when it’s for the first time.

Professional telephone talk has its rules. As mentioned in the preceding paragraphs, a pleasant phone voice sets the tone for the remainder of the call to be one of two things - a success or a disaster. Then there are some basic procedures that need to be closely followed to ensure customers that they are being well-taken care of, such as the way to answer the phone; putting a caller on hold; taking messages; transferring calls and ending the call efficiently so that the customer is satisfied.

Quite often I find that people in companies, who are not strictly involved in customer service, call centres or telemarketing for example, think that they can answer the phone when it rings with a simple “hello”. Perhaps they think that because their position is not customer-oriented or sales-oriented that they don’t need to pay attention to the way they answer the phone and that the call is probably “just an internal call.” This is one of the most common mistakes that is made by general office staff. It doesn’t matter that you are not actually in customer service - the point is that whoever is on the end of the line could be a customer who has somehow gotten through to your extension, they could also be one of your valued suppliers, they could be a colleague in another department or they could be your boss!

People who have good communication skills, with particular regard to the telephone, are an asset that companies cannot afford to be without. Taking it a step further, people who are skilled in handling objections or complaints, and dealing with dissatisfied, difficult and sometimes hostile customers, either over the phone or face-to-face, are worth their weight in gold. At Incorp we place a lot of emphasis on this aspect of training because people, in general, feel that they do not have the confidence or ability to handle what they see as confrontation. They think that it should be passed on to someone else to deal with but in doing that, they are adding fuel to the fire!

In dealing with difficult customer situations, we focus on issues which include projecting a professional and positive attitude, being supportive and cooperative, adopting active listening, choosing vocabulary and verbal techniques, enhancing authority and credibility, getting to the heart of the problem and developing strategies to prevent problems from happening again. At the core of this is to most of all stay in control of emotions, remain sincere as much as possible and continue to work towards resolution - not further conflict.

For some customer service staff it may seem near impossible to handle problems when the caller becomes irate and abusive. But through learning and application, and experience, it is possible in most cases to find ways of overcoming and resolving all varieties of customer related problems. Fear plays a great role in the way we behave when confronted, and if we can begin to understand fear, and how to control it and use it to advantage, then the boost this gives in terms of self-confidence is quite remarkable.

It is necessary to place real importance on this subject and not to simply tag it on at the end of a program session. It requires definite focus and attention. One method is to brainstorm to come up with as many probable objections, complaints or difficult scenarios, and then to dedicate sufficient workshop time to acting on those situations. This can be done through role play and various activities that invite interaction and discussion. Putting people on the spot in the training sessions to come up with credible solutions is a technique that has proven very successful with our programs. We advocate the need for swift but controlled action, thinking “outside the box” and practice, practice, and more practice.

If your company’s training requirements call for improvement of communication skills and indeed for better handling of the customers that nobody wants to handle, then please contact me by email at christina. dodd@incorptraining.com or by calling me directly at Incorp Training Associates in Bangkok.

Until next week, have a great week!

The Doctor's Consultation by Dr. Iain Corness: Quitting the Weed

I used to smoke 45 cigarettes a day. I gave up 21 years, 6 months ago at 10 o’clock in the morning, not that I’m counting or anything! It was probably one of the most momentous decisions I have ever made, and definitely one of the best decisions I ever made about my health.

It was 1981 and I had started smoking as a medical student around 20 years previously. It was just the done thing at the time. We all smoked, it made us feel older and more mature, after all our fathers all smoked, so it was almost a ‘badge’ of adulthood.

As the evidence began to mount up against cigarette smoking at the end of the ‘70’s and the early ‘80’s, I found myself in the silly position of advising people to give up the weed, while I hid my ashtray in the bottom drawer of my desk!

Like all smokers, I was able to rationalise my stand. I was advising patients whose lung function tests were down, but mine were perfect. If mine fell, then I certainly would give up smoking immediately. Yes, you are way in front of me, aren’t you! I had to test my lung function machine one day - and there was the proof - my respiratory function was 15% below the “average” for my age and height. It was ‘bite the bullet’ time!

So I ‘gave up smoking’. I expected that there would be a couple of difficult days, but then the cravings would abate and I would be smoke free again. Two days was an understatement. For two weeks I would follow other smokers down the road, nostrils flared and twitching as I desperately tried to get a whiff of their second hand nicotine. I would look at ashtrays, wondering if I could take a quick lick before anyone would notice my bizarre behaviour. Really, it was a very stressful time of my life.

But after two weeks, the cravings became less, I was able to have a beer without looking for a cigarette at the same time and I had schooled myself into saying, “Thanks, but I don’t smoke,” when offered a cigarette. But it was still very difficult.

In fact, it still is very difficult. I am sure that if I smoked a cigarette today I would be smoking 20 tomorrow and 45 the day after. But I don’t, because I made a conscious decision, based on medical knowledge, all those years ago (21 and a half)!

Since those days, the medical evidence is not just suggestive, it is totally compelling. Cigarette smoking increases your chances of getting just about everything you don’t want, from crow’s feet to cataracts to cancers (all of them, not just lung cancer). So why do we still smoke, any rational member of society would ask? The simple answer is that we, as a society, have been manipulated by big business into taking an extremely addictive drug called nicotine.

Like all addicts we do not wish to admit to addiction, saying, “I can kick the habit any time I want. I just don’t want to right now.” It isn’t your ‘fault’ that you are continuing to smoke. It isn’t your fault that you have returned to smoking after some time of being a non-smoker. It is a drug of addiction and next week I’ll tell you how to stop - permanently!

Agony Column

Camera Class: Colour or Black and White?

by Snapshot

I can remember when all photography was done in Black and White (B&W). You too? To get different colours, toners were added to the final bath for the prints - selenium, sepia, iodine - they all gave a different “cast”, but it was still B&W with a tinge of something else.

The next thing we did was to hand colour B&W to give blue eyes staring out of a grey face which had red lips. Hardly realistic.

However, we then invented colour film. We learned how to make it so cheaply that everyone could afford to use it. We made it so responsive that any simple camera could handle it. We made it universally popular.

This is no object of wonder. We live in a colourful world - and especially so in Tropical Thailand. However, just how “true” are the colours you get back from your friendly one hour photo processors? (Incidentally, have you noticed that most one hour places tell you to come back in three?)

Unfortunately, colour changes from photo processing shop to photo processing shop and from brand to brand and film speed (ISO rating) to film speed. As an exercise, take the same subject with the same camera, at the same time of day with different films and then compare the end results. The camera never lies? It certainly bends the truth with colours.

You will also get spectacular differences in colour depending upon the time of day. The “colour” of the sun’s rays is measured in a scale called Kelvin degrees and this differs dependent upon the time of day. The “blue” end of the range is in the morning and the “red” end in the afternoon. When you are using sunlight as the source of light for your photographs, the colour “temperature” (the degrees Kelvin thing) of the sun’s rays will give the overall cast to the picture. This is why you get “warm” (orange-red) tones in the late afternoon and “cold” (bluish) tones in the mornings.

Now it doesn’t stop with orange and blue. If you use other sources of illumination for your photographs, you will get even more different colour casts. Look at any photographs you have taken where fluoro lights were the principal light source. The resulting photo will have a distinctly “green” hue. Similarly, if “ordinary” (tungsten) light bulbs are the light source you will get a very strong orange cast to the photograph.

Take a look at the shots I have used this week to illustrate colour shift. Even though they are printed in glorious newspaper grey monocolour, you will see an obvious difference. These shots were taken at an open air night concert, and the guitarist is Lam Morrison, for the music buffs. The two shots were taken less than 5 seconds apart, but they look totally different, do they not? The shot on the left was taken by using the flash with the camera (which overpowers the stage lights), while the one on the right was taken after turning the flash off and letting the stage lights be the source of illumination. If it were in colour, you would actually see that the left hand side is blue, while the right hand side is a yellow/green.

Pro shooters will use this colour shift to impart a mood to their shots. When taking a restaurant, for example, you want to evoke a warm, friendly mood. So, turn off all the fluoro’s and the camera’s flash and turn up all the tungsten lights. End result is that warm inviting glow.

Now, if on the other hand you want the bleak wintery feel to a photo, get up early in the morning and take the shot of someone standing alone on a windswept beach. The blue cast from the early morning sun will do that for you. If you are not an early riser, then bung a blue filter on the lens and get the same effect - that cold blue cast through the picture. (But that’s an old pro shooter’s trick!)

Recipes from Rattana: Rice in Coconut Milk

This is actually a Singaporean recipe, though it has a very close counterpart in Thailand. It is also very similar to an old Scottish recipe that calls for barley and cows milk, coconuts not being too plentiful in the wilds of Scotland!

It is not an “instant” recipe dish as the cooking alone will take around one hour and the rice itself should be soaked overnight. The secret is to ensure that the rice takes up all the coconut milk.

Ingredients Serves 4

Rice, long grain 350 gm

Coconut milk 200ml

Salt 1-2 tspn

Cooking Method

Rinse the rice in cold water to get rid of dust and husks and then leave to soak overnight. Drain and place in a rice cooker for 30 minutes, stirring once.

In a pan heat the coconut milk (thin coconut milk is best) and add the salt. Bring to just below the boil, but do not let it boil. Now add the cooked rice and reduce to a moderate heat and leave uncovered for another 30 minutes until the rice has absorbed all the coconut milk.

Before serving garnish with chopped spring onion or fresh chopped coriander.

(In the Thai version, substitute sugar for salt.)

Battling the Crab By Leslie Wright: Part 6 of a 6-part series about fighting cancer

Mood swings

A strange side-effect of the chemotherapy and the latest round of radiation therapy on my brain is mood-swings.

I had read that depression is common amongst cancer patients, and I felt that I had never succumbed to that. But certainly my temper had been affected. I would snap at staff for minor infractions, and found I was far less tolerant and patient than previously. (Although some who know me well would say that I was never particularly patient or tolerant in the first place!)

It is enormously helpful to have close friends you can trust to whom you can talk freely & openly about the disease and its effects (as opposed to self-centred acquaintances - 90% of whom don’t want to know and 10% of whom will be glad.) And this not only applies to the cancer sufferer, but also friends and family members who themselves suffer psychologically along with the victim, and may well have to care for and nurture someone very near and dear who is suffering before their very eyes. It is difficult to maintain a positive outlook and supportive spirit under those circumstances.

If you feel it is easier to unburden to people in a similar situation to yourself, a support group can be very helpful.

But in all cases, it is vitally important to be able to unburden yourself of the enormous stress and tension that inevitably accompanies the fight against the disease and the adverse effects of the radiation and chemotherapy, and the fear of dying, and the onerous task of having to put one’s affairs in order so as not to leave an unholy mess for others to sort out after you’ve gone - and in my case, the additional stress of keeping my brokerage company running as smoothly as my unexpectedly curtailed and limited time would allow, in order to look after the interests of the clients who, when informed last December of my health situation, had overwhelmingly chosen to stay with me rather than transfer allegiance to another brokerage.

Plus of course, I either had to draw down from capital (not a wise move when the markets were still dropping) or generate the necessary income not only to keep the company afloat, but to pay the enormous hospital bills that fighting this disease were creating - which averaged over Bt.150,000 a month! I have been more fortunate in my career path than many, and was financially secure enough to absorb these unexpected additional expenditures. But I rue having let my comparatively inexpensive local healthcare insurance lapse - despite its excluding pre-existing conditions and limiting the choice of hospitals: the one I chose would have been covered, and lung cancer was certainly not a pre-existing condition!

Alternative therapies

When I was first diagnosed with cancer, and given only a limited life expectancy, I read up whatever I could on cancer in general and my cancer in particular.

One of the themes that kept recurring was the power of the mind: having and maintaining a strong positive attitude. Never give up. Hope, pray, rant & cant if it will help - but keep fighting.

In your mind stay focussed on defeating this invasion of your well-being, never letting it gain the upper hand and dragging you down to the pit of despair. Eliminate all negative influences (including doctors of doom & gloom), and keep telling yourself that you will live, that you will get better.

I’m sure this attitude contributed to my going into remission - and remember that this was against all the statistical odds: 5% for; 95% against.

Second, be aware that the standard medical procedures of cutting, burning and poisoning are not the only therapies to be considered, since their success rate in some cases is appallingly low.

At the same time it must be said that many alternative medicines have never been properly tested and evaluated scientifically, and their claimed success rate is very often anecdotal rather than provable.

But again, the power of the body to heal itself is often underestimated. If you truly believe the alternative herbal medicine will cure you, it may well do so.

There are also newly-developed drugs which are not readily available in USA, UK or Europe, because they are still awaiting FDA approval. Clinical trials can take years and are very expensive.

Again, perhaps we are fortunate in that Thailand is one of the countries in which these clinical trials are undertaken (possibly on patients who haven’t the faintest idea what they’re being given, and are too polite and humble to question their almighty doctors); and virtually any pharmaceutical concoction is available without prescription in Thailand.

Immune-system boosters not only work for some AIDS patients, they also help fight some cancers.

Traditional herbal medicines can also play a part. For instance, shortly after I was first diagnosed, a good friend gave me some Chinese-Thai herbal medicine to be taken every day. This evil-tasting concoction is reported to have positive results with cancer - or stimulates the immune system to fight the cancer, or at least, is a tonic to make you feel better (if you can tolerate the taste). So, having little to lose and much to gain, I tried it, and my friend has kindly kept me supplied with it ever since. It may taste horrible, and it may or may not have been efficacious in reducing the tumour, but perhaps it did. Something did.

I also read that taking high doses of vitamins and minerals helps the immune system to fight the cancer. I had been taking the usual vitamin supplements for years, but upped the daily dose of vitamins C, E, A, B, & K and the minerals that are associated with the proper absorption of them - notably selenium & zinc. A potpourri of 10 tablets in all, freely available across the counter of any pharmacy.

I was also introduced by a friend to the therapeutic value of Reiki, which is a Japanese technique for stress reduction and relaxation that also promotes healing by the laying on of hands.

It is not a quasi-religious load of mumbo-jumbo, but does seem to have some real effect on the body. I was introduced to a soft-spoken part-time expatriate resident of Pattaya, who apart from his main profession, is a Reiki master. He kindly took the time to explain to me how Reiki works, and eventually taught me how to apply the therapy to myself. And all for no personal gain! Reiki simply involves laying hands on certain parts of the body, and leaving them there for a few minutes. Somehow, a certain amount of heat really is generated in the hands. And whether this stimulates underlying organs, or the body’s own immune system, or fights cancer cells, I cannot say. If nothing else, though, it relaxes you, takes away a great deal of the tension and stress that accompany battling cancer, and gives you a feeling of calmness and peace. And for those reasons alone, it’s worth doing.

I hope you have found this mini-series helpful in understanding a little of what cancer patients go through, and how much the support and encouragement of friends can mean in what is, literally, a fight for life. But above all, believe you can beat it.

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