Financial foolishness worthy of poisson d’avril
To mark April Fools’ Day ( le poisson d’avril), Connexion asked if I would write about the foolish mistakes people make when it comes to their finances in France. At the time, I could not think of what to write, but agreed anyway.
After 10 minutes’ brainstorming, I had a three-page list and realised that I really could write a book about this (maybe when I retire).
Merely sharing this list, however, would be dull, so instead here’s my pick of four of my favourite stories (altered to protect identities, of course).
1. Not opening their mail or answering their phone. Amazingly, some people move to France, denying that people speak French here. You may not think this causes financial issues but...
I visited someone who had been in France for almost four years. He seemed anxious, having never done anything administrative.
He said that whenever he got a phone call in French, he apologised that he did not understand, in English, and hung up. He finally showed me a drawer which was full of unopened letters, dating back since their arrival.
After 30 minutes of opening mail, I got to one from the huissiers de justice (bailiffs) who were coming to repossess his house in 10 days unless his tax bill was paid.
The demand was huge: way more tax than he would ever have had to pay, but he was obliged to pay it immediately to stop the bailiff coming.
We got it sorted out and he received almost all his money back (the right tax and minimal fines kept). This put him under a great deal of stress. All for the want of getting some professional help (and maybe learning some French).
2. “I went to the tax office and they all pretended not to speak English … it was unbelievable!”
I have to concur but not in agreement with him, I am sure you understand.
3. Run a UK business from your French home and “it is none of their business, is it?”.
Well, actually it is their business under the terms of the UK/French tax treaty.
An extreme version was someone I went to see who had an impressive office in their home, with several PCs, printers, filing cabinets. I warned them that this was not right and risky.
It was not long before he was on the telephone asking me what to do with the six guys representing the tax office who were at his house unplugging his PCs and loading them and his filing cabinets into a van.
I gave him the number of a fiscal lawyer. People assuming that they will never get caught is definitely foolish.
4. L’argent est un bon serviteur mais un mauvais maître (money is a good servant but a bad master).
I’m using a little poetic licence here, as the person was not living in France, but elsewhere. The story is too good to waste.
I went to see someone in their beautiful home overlooking a beautiful bay. The house had been carved into the side of a cliff, giving an unblemished view. His butler met me at the door, took me to this breathtaking view and offered lunch before discussing business “with sir”.
I started by complimenting the owner on living in such an amazing place, to which he replied: “I hate the wretched place, it is ghastly awful and godforsaken … full of foreigners!”
That last point had me struggling not to raise the obvious flaw in his thinking. The natural question was to ask where he would rather be. “I miss my native Shropshire. I have five children and 14 grandchildren, and I miss them.
“My wife died a few years ago and I am alone.” I asked why he did not return. “I just can’t afford to live in the UK. I’d pay too much tax.”
I then asked him what he needed to live on and calculated the tax. Great news: he could live in the UK and have five times more income than he needed. “Pay the tax! Pay the tax!! … is that it? … that is the best answer you have?”
I was dismissed, not feeling remotely sorry for myself, but sorry for him, his children and 14 grandchildren who will never know their grandfather because he wanted to save tax. Money was his master and, indeed, his jailer.
People make many mistakes: not planning properly, not budgeting, not declaring all their income, not taking the right advice, using trusts etc, running UK businesses in France, but this is the one that I find the saddest.
Money is to be respected and properly managed, but we must remember it is there as a facilitator, not only to provide security, but to enrich our lives and those we love, not dominate us.
People are often so focused on saving or making money, they rarely stop to ask what they are doing it for. That is the most foolish thing of all.
This column was written by Robert Kent of Kentingtons financial advisers. See www.kentingtons.com