In last month's breakfast seminar 'Keeping the business and personal boat afloat', Partners in Aberdeen offered several life rafts to those working in the fishing sector through discussing risk control and how to proactively plan for the unexpected.
The fishing sector is regarded as one of the UK's most dangerous professions, with fishermen facing a risk of death six times higher than the most dangerous jobs on land.
In identifying the very real hazards, Leigh Gould discussed the scenario of saving a business from tax claims or claims by the family following the death of a business owner. Continuity of the business in the right hands will be crucial for the business and for the family. Emphasis was placed on making a will, so the business owner controls who gets what and when after his death, and who will be responsible for managing the business thereafter. Leigh also discussed further planning and managing the risks of claims by family members or the payment of tax. To minimise exposure to tax claims, Leigh recommended a thorough review of a business's position in relation to business property relief (BPR) to maximise the available relief, as it can be easily missed but easily captured with some planning. Leigh's advice underlined the importance of forward planning to provide security for family members and to ensure business continuity in the most tax efficient way.
Family and Matrimonial
Separation and divorce can often lead to treacherous waters, where matters can become difficult to resolve. This is often the case where one or both parties own a business. Shaun George identified various methods of contingency planning for the breakdown of a relationship: the starting point being the division of the parties' assets. Shaun defined 'matrimonial property' as all property acquired during the marriage; with property owned or inherited prior to the marriage falling out of the net. Shaun advised that the crucial time to plan ahead for potential separation and divorce is in the event of a restructuring of assets or business interests. If this is appropriate for tax planning reasons, Shaun advised of the benefits of entering into a pre-nuptial or cohabitation agreement. These are becoming more common in Scotland and are often intended to 'ring-fence' business assets or assets that have been passed down through generations. Getting the settlement right can be critical to the future of the business.
Corporate and Commercial
Gill Summers listed key points on partnership and corporate law for those in the fishing sector to consider. In highlighting the pros and cons of different business structures, Gill explained the attraction of a limited company to protect personal assets and limit personal liability or a limited liability partnership, describing it as a 'happy hybrid' between a traditional partnership and a limited company. The catch(phrase) of the day was 'not to bury your head in the sand'. Gill stressed the importance of business owners documenting their arrangements fully to provide certainty and avoid disputes in the future. Up to date partnership agreements or shareholder agreements are key. The default legal position, in the absence of a bespoke agreement, might not be what the owner would expect or have wanted.
Litigation - Insurance and Risk - Marine, Shipping and Transport
Lastly, Malcolm Mackay and Maggie Nicoll tackled key points on the International Labour Organisation's Work in Fishing Convention 2007 (ILO 188). The ILO 188 aims to protect fishermen in vessels of all sizes, regardless of their employment status. Fishermen are now entitled to a fisherman's work agreement, including provisions for improved accommodation and food, medical care, regulated working time, repatriation, social protection and health and safety on board.
Over the last 10 years, 45 people have died in Scottish waters on fishing vessels of less than 50 feet. To avoid these numbers increasing, workers are required to wear a life jacket, or personal flotation device (PFD) when working on open deck; or to have reasonable and effective alternative protection identified. Fishermen must also follow working time rules (10 hours of rest every 24 hours or 77 hours over a 7-day period). Together with the fishing sector, Malcolm and Maggie stressed the importance of on board safety and how the use of PFDs saves lives. Non-compliance of regulations can now lead to fines or imprisonment, with 19 new offences being created. As of 30thNovember 2019, the safety net has been widened for fishermen, with compulsory financial security requirements for sickness, injury and death implemented, as well as increasing the requirement for medical certificates.
If you would like further information to keep things plain sailing for your business, please get in touch with us for expert advice tailored to your needs.