4. Product Quality and Payment Terms. The rule here is simple. Do not make final payment to your Chinese manufacturer until you are confident you will be getting an on time shipment of correct items and quantities at quality standards you require. This usually means you must incur inspection costs in China and provide for a clear procedure for dealing with these problems as they arise. You must take lead on this. You cannot depend on OEM manufacturer to do this for you.

5. Use comprehensive OEM Agreements with each manufacturer. Small and medium sized businesses often enter into OEM manufacturing transactions with a simple purchase order. This is a mistake. The purchase order will protect Chinese manufacturer, not you. Your protection depends on your securing a written OEM manufacturing agreement with each Chinese manufacturer with which you deal. The ideal OEM agreement will address all of issues discussed above while also addressing other basic legal issues such as jurisdiction and dispute resolution. This agreement should be in both Chinese and English, since Chinese language version will control in China.

The Implications of Charge ===============================

Most of Inheritance Tax Planning techniques usually involve a widow or widower having continued enjoyment of their former spouse's share of property and thus it would appear on first inspection that in majority of cases charge would not apply as transferor themselves would not be around to continue to enjoy or benefit from property. 

However, a problem seems to arise where a couple own their property as joint tenants prior to commencing their tax planning strategy and subsequently changing their ownership title to tenants in common. Where widow or widower formerly owned property as joint tenants they had a share in ownership of whole property. This means that new Income Tax charge could conceivably apply to their continued occupation of property after their spouse's death.

A possible consequence of this for future might mean that instead of acquiring property as joint tenants which has been general rule, wise policy would be to own property as tenants in common instead. But how many people are aware of this distinction? Will legal advisors be prepared to explain tax implications of acquiring property with different legal titles?

Conclusion ===========

How far will new charge impact on current Inheritance Tax Planning schemes? As yet, it is too soon to tell, as rules have not been fully fleshed out and as yet, it is too soon to say with any certainty what will happen and which schemes will be affected.

But it seem fair to argue that current Labour Government is doing its utmost to tax its citizens at every possible turn. Inheritance Tax avoidance schemes - indeed any tax avoidance scheme -are not unlawful. Planning for future does not mean that people are engaging in tax evasion - which IS unlawful. But policies being employed leave an uncomfortable impression of an angry parent chastising their child simply for being astute and planning for future!

Needless to say, whole approach leaves a somewhat bitter taste in one's mouth.

JsByrne LLB (Hons) LPc. www.Draft-Your-Will.com