Close Inheritance Tax Service

• Thorough balance sheet analysis
• Regular management meetings and site visits – over 300 per year
• In-house discounted cash flow (DCF) modelling

• 25-35 holdings in each portfolio
• Spread across a broad range of sectors, industries and (where possible) geographies
• Targeting reduced stock and sector specific risk

• Monitor on-going BPR qualification using external tax advisers
• Manage down overweight positions where appropriate
• Sale of holdings where fundamental view has changed

• Financial structure: a strong financial position, visible earnings, robust cash flow and growing dividends
• Market position and customer base: a long trading history, blue chip customers, access to niche markets, strong brands and market leaders
• Other considerations: strong management, under-researched companies and those uncorrelated to the performance of other assets

How we find them

We utilise an extensive network of broker contacts combined with regular market screening to identify potential investment opportunities.

We generate fair value estimates on current and target holdings by running DCF models based on conservative growth estimates. These are used to help guide investment decisions.

DCF models are generated for all holdings. We see cash generation as a key component in stock picking for clients, as it allows us to assess the underlying profitability of companies before we consider making an investment. Our process includes the following:

• We carry out our own proprietary research into existing and potential holdings
• In the post-MIFID II market, there is less independent smaller companies research
• We use our own conservative forecasts in an over-optimistic market
• With recent changes to accounting standards, the importance of focusing on cash generation has increased
• We purchase shares at a discount to what we see as their fair value

To achieve IHT relief for investors using BPR, all investments must be 'qualifying shares'. We ensure that individual holdings will be sold if they no longer qualify – for example, if they were to leave AIM or were taken over by a non-qualifying company.

Investments in smaller companies carry a higher risk than their larger peers. By constantly monitoring the operational performance of investee companies and wider market data, we seek to exit positions should we feel the risks of holding a stock for the full two year period outweighs the tax benefits. Any proceeds can be reinvested into replacement shares without the loss of the accrued holding period within 3 years.

We aim to keep portfolios fully invested where possible, although we keep small cash balances in order to cover ongoing fees.

Generally, investors’ subscriptions are collected and invested together within a new ‘series’. A series is launched after the last business day of every alternate month (February, April, June, August, October and December).

There is no minimum or maximum series size.

We aim to invest client funds as soon as possible, but this process can take up to six months to complete, depending on the availability of suitable investment opportunities and market conditions.

To qualify for BPR, each equity investment must have accrued a two year holding period prior to death. If a client passes away before this time, holdings can be transferred to their spouse or civil partner without loss of the accrued holding periods.

This is subject to receipt of a signed adviser fee charging agreement. Close Brothers Asset Management will facilitate the collection of a client-approved adviser charge.

Portfolio valuations and statements are sent quarterly. It is also possible to ask for an interim valuation, should your clients need one. A consolidated tax pack will be sent out for taxable portfolios each tax year. These documents can also be viewed via our adviser online portal. Please contact us if you would like access to the portal.

As long as your clients leave at least £50,000 invested in CITS, they can make cash withdrawals at any time. These will usually be settled within 10 days of receiving the request. Where larger withdrawals (£50,000 or more) are being made, timescales may be longer due to the sometimes illiquid nature of the markets we invest in.

Please note: it is our understanding that any money withdrawn from CITS will fall back into the client's estate for IHT purposes. We therefore recommend that tax advice is sought before any action is taken.