Tax Efficient Review Issue 165 Generations Inheritance Tax Service

March 2014
Issue 165
IHT
Editor
Martin Churchill
BSc (Econ) FCA
Business Opportunities with potential IHT
benefit targeting capital preservation - with
track record
Generations Inheritance Tax Service
www.taxefficientreview.com
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
Tax Efficient Review
IHT RISK WARNINGS
RISK WARNINGS AND ‘Tax Efficient Review’ (the “Review”) is issued by Tax Efficient Review Limited (“TER”). The Review
DISCLAIMERS is provided for information purposes only and should not be construed as an offer of, or as solicitation
of an offer to purchase, investments or investment advisory services. The investments or investment
services provided by TER may not be suitable for all readers. If you have any doubts as to suitability, you
should seek advice from TER. No investment or investment service mentioned in the Review amounts
to a personal recommendation to any one investor.
GENERAL RISK WARNINGS
Your attention is drawn to the following risk warnings which identify some of the risks associated
with the investments which are mentioned in the Review:
Fluctuations in Value The value of investments and the income from them can go down as well as up and you may not
of-Investments get back the amount invested.
2
Past performance
Legislation
Taxation
The investments may not be suitable for all investors and you should only invest if you understand
the nature of and risks inherent in such investments and, if in doubt, you should seek professional
advice before effecting any such investment.
Past performance is not a guide to future performance.
Changes in legislation may adversely affect the value of the investments.
The levels and the bases of the reliefs from taxation may change in the future. You should seek
your own professional advice on the taxation consequences of any investment.
ADDITIONAL RISK WARNINGS
Inheritance Tax offerings:
• An investment in IHT offerings may not be suitable for all investors
• The value of holdings, including partnership interests and income received from them, may go
down as well as up and Investors may not receive back the full amount invested.
• No guarantee is given that the business undertaken will qualify, or continue to qualify, for business
property relief.
• No guarantees can be given as to the investment performance or the level of return achieved from
investments or that the overall objectives of the investee companies will be achieved.
• An investment in IHT offerings is suitable only for well-informed investors and should be regarded
as high risk and longterm in nature. Potential Investors are recommended to seek the advice of a
financial adviser authorised under the Financial Services and Markets Act 2000 before applying.
• No guarantee can be given that HMRC will grant business property relief on the full amount of
each investment. Loss of business property relief status could occur if, for example, such a business changes its business activities or is taken over by a quoted company or a company whose
business is not a qualifying business for business property relief purposes.
• The past performance of investments should not be regarded as an indication of the future performance of an investment.
• There is no certainty that the market price of an investment will fully reflect the underlying net
asset value or that Investors will be able to realise their investment or that dividends or profit
distributions will be paid. An investment should be seen as a long term investment.
• The information, including tax rules, contained in this document is based on existing legislation.
The tax rules or their interpretation and/or the rates of tax, or other statutory provisions may
change during the life of the investment and such changes could be retrospective. The value of
the tax reliefs will depend on the individual circumstances of an Investor.
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Issue 165
March 2014
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
Suitability
Business Opportunities with potential IHT benefit targeting capital preservation - with track record
Generations Inheritance Tax Access route:
Service Business:
Size:
Minimum investment:
Closing date:
Review source document
Not A UCIS
The review is based upon the Generations Inheritance Tax Service Brochure dated 3rd December
2013 and various meetings with Triple Point.
This offering is classified by the provider as a non-UCIS discretionary managed investment service. The structure involves an investment in unquoted shares in a private limited company.
The Generations Inheritance Tax Service (“Generations Service”) is a new offering from Triple
Point based on their flagship IHT strategy and is designed to appeal to investors seeking an inheritance tax strategy that targets stable businesses to provide capital security and liquidity through
leasing and infrastructure finance.
The Generations Service has been launched to fit alongside Triple Point’s suite of existing IHT
strategies; Generations and Navigator. Triple Point says that the Generations Service combines
the non-UCIS discretionary investment management service structure of its Navigator Service
(Reviewed Issue 127), whilst designed to follow a similar business strategy and return profile to
Generations (Reviewed Issue 127). Please see Table 1 for key differences between Triple Point’s
three BPR strategies.
Table 1: Triple Point IHT offerings compared Source: Triple Point January 2014
TRIPLE POINT
GENERATIONS SERVICE
TRIPLE POINT
NAVIGATOR
Launch Date
Seeking
Minimum to proceed
UCIS offer
Closing date(s)
December 2013
Uncapped
N/A
No
Evergreen
June 2013
Uncapped
N/A
No
Evergreen
Structure
Discretionary investment management
service. Investments into trading businesses
targeting leases and infrastructure financing
arrangements with public sector organisations
and good quality companies, arranged by Triple
Point as the discretionary investment manager.
Discretionary investment management service.
Investment into a LLP. An individual will
Investments into trading businesses arranged
become a member of Generations Capital V
by Triple Point as the discretionary investment
manager. Initially into one company Navigator Limited Liability partnership, which is already
Trading Limited which will trade in a series of taking part in Triple Point Lease Partners, the
typically Leasing and Asset Finance, Short Term underlying Partnership which participates in
the BPR qualifying trade of leasing
Corporate and Trade Finance and other business
funding opportunities
Leasing and infrastructure finance Targeted business funding
Strategy
Minimum sub
£50,000
£50,000
Distributions
None
None
Cash plus after fees and charges. 3%-7% pa, after fees and charges
Target IRR
Target distribution
N/A
N/A
Quarterly basis, with 90 days notice Monthly basis, with 90 days’ notice
Liquidity
Front end costs
2.50%
2.50%
Annual Triple Point costs
1.50%
1.50%
Exit fees
TRIPLE POINT
GENERATIONS
Access via Personal Trading
Access via LLP
Company
August 2006
Uncapped
Uncapped
N/A
N/A
Yes
Yes
Evergreen
Evergreen
Investment into a Personal Trading Company
which will become a member of Triple Point
Lease Partners, the underlying Partnership which
participates in the BPR qualifying trade of leasing
Leasing and infrastructure finance
£100,000
£500,000
Yes
Yes
Cash plus after fees and charges
Annual net income
Quarterly basis subject to 90 days notice
2.50%
2.50%
1.50%
1.50%
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
New offering
Discretionary investment management service (non-UCIS)
Leasing and infrastructure finance
Uncapped
£50,000
Evergreen structure
1-2 years None; year 3 2.5%; year 1-2 years None; year 3 2.5%; year 1-2 years None; year 3 2.5%; year 1-2 years None; year 3 2.5%; year 4
4 2%; year 5 1.5%; year 6 1%; 4 2%; year 5 1.5%; year 6 1%; 4 2%; year 5 1.5%; year 6 1%; 2%; year 5 1.5%; year 6 1%; year 7
year 7 0.5%; year 8 on none
year 7 0.5%; year 8 on none
year 7 0.5%; year 8 on none
0.5%; year 8 on none
25% of gain in excess of 5%
pa compound on exit after all
None
None
fees including exit fee
As agreed with advisers or
Directors fees and other
Capped at 1%
Capped at 1%
Dependant on the number of circa
£3,000 p.a. if Triple Point’s
running costs
plus Triple Point annual 1.5% plus Triple Point annual 1.5% members. Currently 0.12%
turnkey service used
Sale fee
None
None
None
None
Time taken for BPR clock
None
None
None
None
to start
Required to appear on tax
No
No
Yes
No
return*
*assuming no transactions are made
Perf fee
None
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Issue 165
March 2014
3
Business Opportunities with potential IHT benefit targeting capital preservation - with track record
Individual investors determine amount to invest in business opportunity offered by
Generations Service
Exit charge as % of
proceeds payable
Balance after initial fee is
invested by discretionary
investment manager
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
Annual 1.5%
of amount
invested
TRIPLE POINT
INVESTMENT
MANAGEMENT
LLP
DIRECTORS
JAMES CRANMER
ALASTAIR IRVINE
CLAIRE AINSWORTH
TRIPLE POINT LEASING LIMITED
Series of leases and infrastructure financing arrangements with public sector organisations and good quality
counterparties
Diagram 1: Triple Point Generations Inheritance Tax Service structure
The real difference in our view is that, currently, investors will be invested into a single trading
company (Triple Point Leasing Limited "TPL") that seeks to provide access to a diversified portfolio
of leases and infrastructure agreements, rather than the large trading partnership Triple Point
Lease Partners (“TPLP”) which currently has £95m of funds. TPL will follow the same business
strategy, and hence low return profile, as TPLP. Triple Point tell us that TPL will initially co-invest
with TPLP to help diversification and that as at 8 March 2014 TPL has raised £650,000 since its
launch in December 2013.
The size of TPL is important as it indicates the amount of spread that potential investors can
expect.
As at 10th March 2014, c.90% of funds are deployed and the balance is held in cash and the
make-up of the business is as follows:
• 40% Local Authorities
• 33% NHS Trusts
• 27% High Grade Corporates
Triple Point launched the Generations Service in response to a demand for a non-UCIS version
of their existing IHT strategy, Generations, which is classified as a UCIS. The Generations Service is
designed to offer investors a high degree of capital security and liquidity, whilst targeting lower
risk returns that are comparable to asset classes such as bonds and cash. The Generations Service
provides access to trading businesses which are expected to qualify for BPR and will deploy funds
into trading businesses which aim to target a broad spread of Local Authority , NHS Trust and high
grade corporate leases and infrastructure financing arrangements to deliver stable, predictable
Cash Plus returns, whilst providing investors with control and access to their funds.
Generations was launched in 2006 to offer investor’s access to TPLP, providing capital security
with competitive risk adjusted returns and potential IHT benefits. The Generations Service provides
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Issue 165
March 2014
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
TRIPLE POINT AS DISCRETIONARY
INVESTMENT MANAGER SELECTS
INVESTMENTS TO BE MADE
Objectives
4
Uninvested cash
held by AIB
GENERATIONS SERVICE

2.5% INITIAL FEE
TO TRIPLE POINT
INVESTMENT
MANAGEMENT LLP
individuals with access to a Triple Point-managed business which follows the same strategy using
the exact same specialist team and resources as TPLP. TPLP participates in the BPR qualifying trade
of leasing and infrastructure finance. Via the Generations Service, individuals participate in a business (or potentially businesses) principally trading in leases and other contracts with high-grade,
creditworthy counterparties including local authorities, high grade companies, the NHS, and a
limited number of finance leases with small and medium size businesses.
Key highlights of the Generations Service include:
• Simple structure: the structure is easy to understand; investors are allotted unquoted shares
in private limited company/ies.
• Liquidity: investors can request the withdrawal of all or part of their funds on a quarterly
basis, subject to 90 days notice.
• Track record: Triple Point has a proven track record in providing investors with IHT mitigation
and since 2006 it has been running a leasing and infrastructure financing business.
• Sector expertise: Triple Point has a dedicated and experienced team of public and private
sector leasing specialists.
• Capital growth: profits generated by the Service are retained and therefore reflected in capital growth rather than dividends.
• Cash Plus returns: net of all fees, charges and corporation tax and based on the net asset
values of the investments held through the Service.
• Additional funds: investors may add to their initial investment at any time. Additional contributions are likely to take two years to become exempt from IHT.
Strategy
Generations Service provides individuals with access to businesses that are expected to qualify
for BPR. The businesses selected by Triple Point, as the discretionary investment manager will target a broad spread of operating leasing, asset finance and infrastructure financing arrangements.
Triple Point says Generations Service is designed to:
• Achieve inheritance tax relief in 24 months
• Deliver stable, predictable cash plus returns after fees and charges
• Provide investors with continuing access to their funds through the ability to sell shares
either to new investors or through company buyback.
Steps to access the Service:
An investment in the Generations Service should qualify for BPR following a two year holding
period and, therefore, an investment in the Generations Service may fall outside an individual’s
estate for the purpose of calculating inheritance tax.
An individual decides on the amount suitable for investment, and completes the Generations
Service Application Form and Investor Agreement. Funds are held in a Client Account whilst awaiting allotment. As the discretionary manager, Triple Point arranges investments into private limited
company/ies. Please see Diagram 1 for Generations Service Structure.
These companies will target a broad number of agreements with similar risk and yield spread to
Triple Point’s current business, TPLP.
Business Model
The primary objective of Generations Service is on controlling risk and seeking capital preservation. As the manager, Triple Point will target three key investment areas:
1. Finance leasing
2. Operating leasing
3. Infrastructure finance
Leases provide for the hire of assets to a lessee over a contracted period in return for rental payments. The ownership of that asset is retained by the investee companies in which the Service has
arranged investment. The Generations Service will target two types of leases: a finance lease and
an operating lease.
Since launching their flagship IHT strategy in 2006, Triple Point has been active in finance and
operating leasing. The Generations Service may enter into finance leases which provide for repay-
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Issue 165
March 2014
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
Business Opportunities with potential IHT benefit targeting capital preservation - with track record
5
6
ment of the full purchase cost of equipment, as well as a finance cost. At the end of the contract
the ownership of the asset typically passes to the lessee.
In addition, the Generations Service will enter into operating leases which are typically used by
lessees to acquire assets on a relatively short term basis – between 2-5 years. Under the initial
contract, up to 90% of the equipment purchase price will be repaid in addition to the finance costs.
The lessor retains the benefit of ownership. At the end of the lease, the lessor may:
• Lease the asset to the existing lessee at reagreed rates
• Sell the asset
• Lease the asset to a new customer
In addition to operating and finance leases, the Generations Service will engage in infrastructure
financing, which shares the same characteristics as leases providing for specific receipts on specific
dates over a certain period of time. Infrastructure opportunities will typically have the following
characteristics:
• Highly predictable and regular income
• Inflation proofing
• Tangible assets
The Generations Service current sub-£1m portfolio comprises 17 lease agreements.
Approximately 88% of these agreements are operating leases, with 22% of the book in infrastructure financing agreements. The average term of these arrangements is just over 5 years.
Examples of the asset types within the current portfolio include:
• Local Authorities – refuge collection vehicles, fire engines and pumps; mowers, wood chippers, IT equipment and small vans.
• NHS Trusts - radiation bunkers, endoscopes, gastroscopes, ambulances, x-ray equipment.
• Corporate – specialist recycling vehicles and biomass engines, LED lighting in refrigeration
units, biomass and woodchip boilers, solar panels.
The returns could provide stable earnings and visible income generation, and are underpinned
by contractually secured cash flows from high grade counterparties. Returns are commonly
hedged against inflation through index linking and the stable income should be reflected in less
volatile capital values. There is also the potential for upside as the contractually backed cash flows
may be refinanced at a premium.
The Generations Service’s focus on capital security means that a large proportion of deals are
with public sector counterparties. The tendering process for all UK public sector deals is through
the Official Journal of the European Union, “OJEU”. Private sector deals are sourced through a variety of direct sources (usually with equipment manufacturers) or indirect sources (agents who bid
for deals but do not finance them themselves).
Triple Point is a specialist in leasing and has used the services of Cranmer Lawrence as its lead
broker since 2006. Cranmer Lawrence is a public sector leasing agent in the UK. The agent will
be instructed by the investee companies targeted by the Service as to the types of leases being
sought (asset class, duration, status of acceptable lessee, size, indication of required return and
residual value) and the agent will then tender on TPL's behalf for the deals.
A typical deal structure will contain contractually guaranteed revenue generated by high grade
counterparties derived from specific payments in advance on specific dates over a period of years.
The operating lease documentation deployed in the business is largely standardised, with common
terms and conditions. The documentation will typically include:
• “Hell or high-water” payment terms
• No prepayment rights
• Termination charges and processes
• Insurance requirements
• Return conditions appropriate for the asset type
• Maintenance obligations
• No right of off-set
Tax Efficient Review www.taxefficientreview.com
Issue 165
March 2014
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
Business Opportunities with potential IHT benefit targeting capital preservation - with track record
Business Opportunities with potential IHT benefit targeting capital preservation - with track record
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
Legacy Original Cost
Code
Original RV o/s RV
Original
Lease End
Date
31/03/2011
09/03/2012
20/03/2012
24/03/2012
31/03/2012
30/09/2012
31/12/2012
19/02/2013
20/03/2013
23/03/2013
25/03/2013
30/09/2013
15/12/2013
18/02/2012
03/03/2012
Table 2: TPLP assets sold
Gross
Additional
Proceeds
Profit/Loss
OL123
17,850.00
3,570.00
4,000.00
OL21
47,624.00
14,287.20
21,688.85
OL33
24,130.29
3,619.54
4,250.00
OL44
195,600.00
43,032.00
66,030.50
OL59
26,728.03
5,880.17
7,672.10
OL126
13,200.00
3,960.00
4,500.00
OL131
62,673.00
9,495.00
13,500.00
OL12
8,685.00
3,973.73
8,830.00
OL34
14,315.75
2,863.15
3,332.50
OL36
39,320.00
9,633.40
9,640.00
OL73
51,571.92
9,437.66
11,350.00
OL2 1,207,245.00
356,000.00
440,000.00
OL7
13,886.55
1,388.66
1,760.58
OL11
265,860.00
58,489.20
64,500.00
OL18
25,787.82
5,673.32
6,942.93
£2,014,477
£531,303
£667,997
Tax Efficient Review www.taxefficientreview.com
430.00
7,401.65
630.46
22,998.50
1,791.93
540.00
4,005.00
4,856.27
469.35
6.60
1,912.34
84,000.00
371.92
6,010.80
1,269.61
£136,694
Additional
Profit as a
% of RV
12%
52%
17%
53%
30%
14%
42%
122%
16%
0%
20%
24%
27%
10%
22%
26%
Issue 165
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
The pricing of leases is driven by the return required by the Generations Service taking into
account the expected residual value. The cost of funds will not be fixed as it will not raise funds by
borrowing, but like other market participants, will base its pricing on the Swap Rate for the lease
period in question.
The Swap Rate is an indication of the interest rate that a lender would require from a high quality counterparty in order to lend over that length of time. The rate is sourced from published data
on the day the transaction is completed and is usually a slight premium over the Gilt Yield. Triple
Point has typically added a margin of c.1-1.7% to the Swap rate for costs and profit if the counterparty is a public sector body with negligible credit risk. Triple Point states that they expect the
Swap rate margin to be similar for TPL. It is anticipated that corporate counterparties will allow
TPL to command additional return.
The residual value of the asset, whether sold or re-leased, at the conclusion of the contract is
also a key component of the pricing process. As the Generations Service is a new offering, it will
draw on the experience within Triple Point and its track record in retaining a positive residual
value. Triple Point claims that the simplest means of realising expected or enhanced residual values is for lessees to re-lease their plant and equipment at the end of the initial term, which is the
most frequent outcome at lease maturity.
The overwhelming majority of lessees re-lease throughout the economic cycle and this typically
increases in a recession. Thus, residual value returns have the potential to rise even when the economic climate is weak.
We asked Triple Point to provide details on the leases in TPLP that came to the end of their primary lease in the last five years with details on their disposal or re-leasing.
Triple Point replied:
"To date c.£1m of residual values have reached maturity within TPLP. 40% of assets by
Residual Value amount were rehired and continue to be hired to the existing lessee, generating an ongoing financing return and reducing the outstanding residual value exposure.
We anticipate that these assets will continue to generate a financing profit for the partners
along with the ability to make further additional return should the assets be sold or released
at the rehiring lease maturity date.
The remaining 60% of maturing assets have either been sold at the end of their initial term,
or rehired to existing lessee and have subsequently been sold at the end of the extension
period (s). A small number are off hire pending sale. Although some individual assets have
realised a loss on sale, the aggregate outstanding residual values on disposed assets has
been fully recovered and a profit generated for TPLP."
The detail provided by Triple Point is in Table 2.
Notes
Sold at primary Maturity
Lease extension then sold
Sold at primary Maturity
Lease extension then sold
Sold at primary maturity with damages charged
Sold at primary Maturity
Sold at primary Maturity
Lease extension then sold
Sold at primary maturity with damages charged
Sold at primary maturity with damages charged
Lease extension then sold
Sold prior to maturity
Sold prior to maturity
Sold at primary Maturity
Sold at primary maturity with damages charged
March 2014
7
The Board of TPL will assess each lease before it is chosen for the Generations Service. Leases will be
selected based upon stringent criteria including:
• the lessee must be a UK Corporate or a public sector entity
• Operating leases to have a typical residual value of 10-30% of original equipment purchase cost;
• Lease to be subject to UK law and acceptably documented
• The lease is acceptably documented and subject to an acceptable jurisdiction;
• Contractual lease payments are made monthly, quarterly or annually.
• The asset class must be acceptable.
• The lessee, if a public entity, must not be acting "ultra vires" or outside its powers and the deal
must be properly contracted
• The deal must be executed in accordance with documented policies.
The Generations Service’s primary objectives are capital preservation and risk control and it will seek
to follow the same business strategy and target a similar portfolio as Triple Point’s flagship IHT strategy.
Launched in 2006, that business finances and trades in a well diversified blend of operating leases and
other trading activities with lease-like characteristics, such as infrastructure funding and a limited number of finance leases predominantly with small and medium sized businesses. It has grown to a c.£95
million business principally trading with high-grade, creditworthy counterparties, carefully selected
for credit profile, counterparty quality and the predictability of revenue streams. In all business areas,
Generations trading strategy is targeted at the lower risk segment of the market in which it operates and
is intended to deliver relatively stable returns.
Potential returns
The returns of the Generations Service are a product of the overall return on the lease portfolio, which
itself is a function of:
a) Required yield and
b) Residual values built into the leases
c) Interest earned on the uninvested portion of TPL's funds
d) Split between leases and cash of the funds in TPL
e) Expenses and fees from the gross return to arrive at the investor’s return.
It is anticipated that as the assets under management grow, the investee companies targeted by the
Generations Service will invested in larger contract sizes without creating a concentrated portfolio and
thus increases the business opportunities available to it. A dramatic increase in AUM might create a scenario where the deal flow did not match large inflows from new investors. The size (several billions per
annum) and stability of this market means that any mismatch would only be temporary, but it should be
noted that delays in deploying newly invested funds would probably reduce returns temporarily.
Tax Efficient Review Fund Objectives/ Business Model rating: 33 out of 40
Track Record
Triple Point is a specialist provider of private capital to VCT, EIS and IHT strategies, and has a track record
in selecting businesses with predictable revenue streams and which are often asset backed.
Triple Point has been active in managing tax efficient products since its inception in 2004. In 2006,
Triple Point launched its flagship IHT strategy, Generations, providing access to the underlying business of
leasing and infrastructure finance, the same business strategy that the generations Service will engage
in. The business is currently valued at c.£95m and has achieved steady year on year profits. Profits have
been in line with its investment policy of Cash Plus returns, generating small positive results in every consecutive quarter of its trading. The table below shows the historic returns of this strategy:
Period
19.04.06 - 31.12.06
01.01.07 - 31.12.07
01.01.08 - 31.12.08
01.01.09 - 31.12.09
01.01.10 - 31.12.10
01.01.11 - 31.12.11
01.01.12 - 31.12.12
01.01.13 - 31.12.13
Return Net of Triple Point’s fees
2.2%
4.4%
3.3%
2.6%
3.8%
2.3%
1.8%
2.6%
Note that these returns are quoted after Triple Point's annual management fees of 1.5%.
8
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Issue 165
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Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
Business Opportunities with potential IHT benefit targeting capital preservation - with track record
Manager
The key members of the Generations Service Team include:• James Cranmer – Triple Point Principal. James spent seven years as a principal with the
specialist asset finance company Cranmer Lawrence and Company where he was responsible for lease originations in excess of £500m into UK Local Authorities, NHS trust Hospitals
and FTSE 100 organisations. Prior to this James spent five years with Hambros bank, latterly SG, where he was responsible for the management of the public sector vendor finance
activities. James has been involved in TPLP since its inception in 2006, and has been part of
the TPLP Credit Committee since 2006.
• Claire Ainsworth - Managing Partner of Triple Point - Claire started her career at Hill
Samuel before joining Morgan Grenfell, subsequently Deutsche Bank, where she spent 16
years specialising in structured finance. As a Managing Director of European Securitisation,
Claire was involved in transactions totalling £10 billion, as well as running the group’s
European conduit platform. Whilst at Deutsche Bank, she was a member of the European
Securitisation Forum’s reporting and regulatory committees. Claire has been part of the
TPLP Credit Committee since 2006 .
• Paul Oliver - Paul joined Triple Point in July 2013 and has worked in the Leasing and
Credit industry since 1976. Working originally in credit and operational management for
Lombard Finance, he went on to establish and manage start-up leasing operations in three
market areas; in a Vendor captive finance business, for Japanese-owned Nikko Bank and
finally as an independent leasing business, Virtual Lease Serviced Limited. At the time of
leaving, VLS managed over 50 discreet client portfolios and some 40,000 end-customer
rental, service and lease agreements.
• Neil Richards - Qualifying as a Chartered Accountant in 1991 with Ernst & Young, Neil
started work as an accountant in a London Bank in 1992. In 1997, he took on the role of
Finance Director for the Bank’s £300m Group of leasing subsidiaries. Following the successful sale of these businesses, Neil was one of the original founders of Virtual Lease Services
in 1999. Neil joined Triple Point in September 2013.
Tax Efficient Review Management Team rating: 27 out of 30
Liquidity
The Generations Service has been designed to allow investors to request the withdrawal of
funds at any time. Triple Point will attempt to arrange the realisation of investments on the quarter date following 90 days notice from the date of the withdrawal request. The Brochure states
that in exceptional circumstances, such as a change of legislative framework, the process could
take much longer and investors may receive withdrawals in instalments.
If investors wish to retain an investment though the Service, the minimum balance after withdrawals is £25,000. Please note that generally an investment must be held for two years in order
to qualify for BPR.
Deal Flow
Access to deal flow should not be a problem with the strong network the lease team has with
both equipment manufacturers and agents. Initial deployment of funds is expected to take a
sub-participation in Triple Point’s current leasing business in order to ensure diversification. Triple
Point states that this should allow for the swift deployment of funds.
Winning lease deals is, however, not the only test. The real test in order to generate the projected returns and upside is securing profit table lease deals where the residual value is both realistic
and achievable. Triple Point has an established track record in doing this, led by James Cranmer
and bank participants in the market have achieved this.
Tax Efficient Review Deal Flow/Exit rating: 17 out of 20
Costs
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
Business Opportunities with potential IHT benefit targeting capital preservation - with track record
An initial charge of 2.5%, payable to Triple Point, will be deducted from the initial investment
amount. To the extent that the equivalent amount is paid to a member of the Triple Point Group
from an entity into which the funds are deployed, no initial charge will be levied.
An annual charge of 1.5% (plus any applicable VAT) of the current value of the investment
Tax Efficient Review www.taxefficientreview.com
Issue 165
March 2014
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Business Opportunities with potential IHT benefit targeting capital preservation - with track record
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Realising shares may give rise to a tax liability and the amount realised will be reduced to the
extent that any stamp duty is payable as a result of the transaction and by any reasonable costs
that arise in respect of such realisation.
Financial advice – the adviser can be paid directly by the Investor for both initial and annual ongoing adviser charging:
• Initial – alternatively, for initial charging, Triple Point can facilitate the payment by sending
the agreed amount to the adviser from the amount paid into the Service on instruction from
the Investor.
• Ongoing – for annual on-going adviser charging, Triple Point may, on instruction of the
investor, realise the appropriate number of shares to facilitate the payment to the adviser.
The Triple Point Group will not seek to apply any dealing charge to such transactions.
Access to Funds/Exit
Investors can access their capital on quarterly vesting dates: 31 March, 30 June, 30 September,
31 December, subject to 90 days’ notice. In exceptional circumstances, such as change of legislative
framework, the process could take much longer and Investors may receive withdrawals in instalments.
Tax Efficient Review Fund Costs rating: 8 out of 10
Conclusion
Generations Inheritance Tax Service is a business opportunity involved in leasing to high quality
counterparties conducted through a newly formed company, Triple Point Leasing Limited. It offers
investors the opportunity to invest in a fully managed leasing business trading in, and profiting
from, high quality leases. High quality operating leases, the financing of physical assets for large,
creditworthy organisations, are an established alternative asset class and offer attractive investment characteristics. Previously this asset class was the preserve of banks and major corporations,
but Generations Inheritance Tax Service enables individuals to access this large, stable industry.
An interest in Generations Inheritance Tax Service should qualify for Business Property Relief
(‘BPR’), and therefore an investment may fall outside an individual’s estate for the purpose of calculating inheritance tax.
In assessing offers with business opportunities which could be attractive to investors seeking an
IHT benefit, we look at the following aspects:
• Good downside protection
Should be achieved through prudent counterparty selection with most leases being with
either Local Authority or NHS entities, carefully selected for their quality, credit profile and
the predictable, contractually secure nature of their revenue streams
• Some upside potential
Realisation of residual values (probably from secondary lease revenues) might achieve an
uplift. The likely variance around the base case assumed residual value is likely to be relatively small. Whilst a small number of leases have reached the end of their term, thus far
Triple Point tell us that residual value returns have been in line or slightly ahead of expectations.
• A non-contentious business model
Leasing, particularly operating leases, should be an acceptable business to HMRC.
Tax Efficient Review www.taxefficientreview.com
Issue 165
March 2014
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
through the Service is payable on a monthly basis to Triple Point Group from an entity into which
the funds are deployed, no annual charge will be levied.
An exit charge is payable to Triple Point of the following percentages of the proceeds of realisation of the investment:
Years from subExit charge on
Years from subExit charge on withscription
withdrawal
scription
drawal
1
No charge
2
No charge
3
2.5%
4
2.0%
5
1.5%
6
1.0%
7
0.5%
8
No charge
Business Opportunities with potential IHT benefit targeting capital preservation - with track record
Low charges
Charges are not particularly low
• Good liquidity
Leasing should provide adequate liquidity unless substantial numbers of investors seek to
withdraw at the same time. In the highly unlikely event that all investors in Triple Point
Leasing Limited require most or all of their capital out within a short time scale, Triple Point
Leasing Limited could sell all or part of its lease book
Triple Point say that returns are expected to be consistent and in line with low risk investments
such as cash, which is a characteristic of a business focused on capital preservation and minimising
downside risk.
The low returns being earned bt the product are counterbalanced by the good level of liquidity
that leases should help provide. Capital invested in Triple Point Leasing Limited should, after two
years, qualify for BPR and thus be exempt from an estate for IHT purposes, equivalent to an uplift
of 66.6%.
Out rating reflects the fact that Triple Point Leasing Limited is a new start-up and until it reaches
a good level of funds invested, there will be a limited amount of diversification in its asset portfolio.
Tax Efficient Review rating: 85 out of 100 (for offers with a relevant track record)
Tax Efficient Review www.taxefficientreview.com
Issue 165
March 2014
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
Printed for Mr Chris Tottle of Triple Point Investment Management LLP.
•
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