Nothing Stays the Same by Paul Aplin OBE

Change is the only constant in life, including the world of taxation. In today’s guest article, Daysium’s Senior Advisor Paul Aplin OBE reflects on the seemingly small shifts and their lasting impact. Drawing from personal memories and decades of professional experience, Paul explores the risks of overlooking tax changes, the importance of asking the right questions, and why staying informed is critical. His reflections are both a reminder and a guide: nothing stays the same, and in tax, that can be costly. 

One of my happiest memories is of driving up Highway 1 on the California coast with my new girlfriend (now my wife of over 30 years) in a Mazda RX-7 listening to Carly Simon singing Coming Around Again. The words “nothing stays the same” echoed – and still echo -in my mind. On that trip, we listened to the song on a cassette tape; later we bought a CD and these days we can stream it. The same, yet not the same.

As with life, so with tax: things change constantly and failing to notice what has changed or even what may change can be incredibly costly.

Most of my clients – rightly – relied on me to be on top of the tax provisions that were relevant to them and took no particular interest in trying to understand the rules themselves. I also had clients who did take a great interest in particular areas of tax that affected them directly and who monitored changes closely (though their knowledge of other areas was often limited). Other clients remembered how a particular transaction had been taxed in the past and assumed that future transactions would be taxed in the same way.

Having clients who knew enough to ask me challenging questions never bothered me: I welcomed it in fact, because it reassured me that they understood my advice and – just occasionally – it made me realise that I needed to do some more thinking about a particular point. There are, however, risks when clients research tax topics themselves, a problem heightened by the advent of generative AI.

Some clients, while knowing a great deal about, for example, the UK statutory residence test may not have knowledge of the broader tax landscape. One who came to me for a second opinion and clearly understood the tax residence rules inside out did not know that his residence status might affect his choice on how to extract profit from his personal limited company. A simple change of approach could have saved him tens of thousands of pounds in tax (and, going forward, did).

Another danger is illustrated by the client who fully understood the way a previous transaction had been taxed and who therefore assumed that a future transaction would be taxed in the same way, only to discover after the event – and to their horror – that the rules had changed and that the tax consequences were now very different. Salvaging such a situation is generally (though not always) impossible.

The introduction of the UK Statutory Residence Test in 2013 removed a great deal of the uncertainty that surrounded the question of tax residence. There have, however, been other changes affecting non-residents, including changes to Capital Gains Tax and the introduction of the Annual Tax on Enveloped Dwellings (Carly Simon won’t be writing a song about that one). The same is true of domicile, with some radical changes in the Finance Bill currently passing through Parliament.

My advice to anyone who does not hold a tax qualification – no matter how well they think they know the subject – is always to check their understanding with someone who is qualified. It is important to do this before undertaking a transaction or taking action, to ensure that the outcome being sought is the one that will actually transpire: some actions cannot be undone. The sheer volume of tax legislation and speed of change makes it more important than ever to understand the rules.

And yes, I do still have that audio cassette from 1987.