Well…nobody’s perfect

Well…nobody’s perfect

Picture the scene. You’ve spent the weekend putting up new bedroom shelves only to see them collapse when your other half pops in to admire your handiwork. Do you take the hammer to the timber now lying askew on the carpet, or toast your mediocre joinery skills effort with a glass of champagne?

Then you decide to prepare a roast chicken with all the trimmings to console yourself, but are so distracted watching Spurs put Arsenal to the sword (yes, this does happen sometimes) that the bird burns in the oven. Do you delicately chip the charred offerings into the bin like Harry Kane, or celebrate the culinary disaster by finishing off the rest of the champers?

The chances are most of us are tempted to do the former, but we really should do the latter because sometimes the best way to get things right is to get them wrong first.

Celebrating failure

Organisations across the globe have embraced this idea – leading accounting software company Intuit even gives an award for the firm’s ‘Best Failure’ and celebrates their sparkling under-achievement at ‘failure parties.’ Co-founder Scott Cook explained: ‘At Intuit we celebrate failure because every failure teaches something important that can be the seed for the next great idea.’

Can a progressive independent financial advisor practice take anything from the example of a leading accounting software company?

I considered this after a recent meeting with a new client (the director of a limited company in Putney) and her accountant. The director wanted to discuss retirement planning and take some investment advice. I’d assumed they would already have a lot of the answers to their questions and a good idea of the solutions that we might provide, but I got it wrong.

I began to realise this as the three of us talked about the client’s short to medium term financial objectives, one of which was to look at tax efficient ways to release profits from her company. I was surprised they’d never seriously explored the possibility of investing more of the company profits into her SIPP (Self-invested personal pension). I pointed out this would help shift more of her business profits into her personal assets and that a pension fund – whilst it’s growing – pays no income or capital gains tax. And because pension contributions are classed as a business expense, this would also help to reduce the company’s corporation tax burden.

The conversation then turned to a sum of money the client held in a personal savings account earning very little interest. We agreed that ISAs would be a good first port of call, but she wanted to consider other ways of limiting tax on any investment gains she might stand to make over time.

The accountant suggested that tax efficient, higher risk investments like VCT or EIS might be able to play a part (these offer all manner of tax advantages), but the client favoured a more cautious approach, so I raised the possibility of using Investment Bonds.

The accountant shifted in his chair slightly at this point. He was familiar with the general tax treatment of these investment vehicles but didn’t fully appreciate the unique benefits they afford to higher rate taxpayers.

Like an investment ISA or pension fund, a portfolio sheltered within a bond can be shaped to suit an individual’s attitude to risk. The major advantage to higher rate tax-payers is that they’re not personally subject to tax on the gains made within the bond at the point they arise. This provides an opportunity to defer tax liabilities on gains until a more favourable point in the future e.g. when the investor might become a basic rate (or non) tax-payer. Another great feature is that you can draw up to five per cent of the money invested without an immediate liability to income tax, which can help supplement retirement income. They’re also very handy vehicles for passing money to your beneficiaries, which can help reduce Inheritance Tax bills.


At the end of the meeting the client was delighted with the progress we’d made in translating her goals into a concrete financial plan and I myself had learned a valuable lesson. At Arkenstone we know that professional advice shows our clients how to face their financial future with confidence, but I’d wrongly assumed that the client and accountant would know how we achieve that, which led to a couple of crossed wires and awkward moments.

It reminded me just how important it is to approach every situation with a completely open mind and to put assumptions and pre-judgments aside, regardless of another person’s level of expertise. A little wake-up call can only be a good thing and, on reflection, it might have been an idea for me to call the account beforehand to discuss the agenda and some of the finer points.

I’m happy to say this client now has a financial plan that’s both clear and tax-efficient, so she’s on the road to achieving her long-term life goals. If that’s something that would interest you too, then get in touch – I’m sure we can help.

Now, if you’ll excuse me, I’ve got a chicken in the oven and Man City are about to hand Spurs a lesson of their own…..



A pension is a long-term investment not normally accessible until 55. The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invested. The examples within this article personalised to the client circumstances and objectives. It is not a recommendation to purchase any particular product. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.

The Financial Conduct Authority does not regulate tax advice.

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