WealthTech & Industry Partnerships Can Provide Tax Reclamation Services

[00:00:02.170] – Alex Serman

So welcome to this edition of the Whiskey & WealthTech podcast. I’m your host Alex Serman, Managing Director of Wealth here at First Rate today. Joining me is Jason Yule from WTax. Jason, thanks for joining me. Could you just give us a little introduction about yourself?

[00:00:23.410] – Jason Yule

Great. Thanks, Alex. Very happy to be here. My name is Jason Yule and I am the Head of Strategy and sales for WTax in North America. And I’ve been with our business about four years now and my primary focus is really working with institutional investors within the North American market to support the withholding tax recovery needs.

[00:00:49.550] – Alex Serman

Excellent. Thank you. So Jason, what are we drinking today here?

[00:00:55.570] – Jason Yule

So today we’ve got a bottle of Lagavulin. I’ve got the 16 year. It’s a nice I like peated whiskey. Very smooth peated whiskey. In all honesty, today I was actually struggling to get this, so I had to get it from a sort of door dash last minute. And my colleagues seeing this door arrive at the office with a bottle of whiskey in a brown paper bag must have thought, I don’t think they knew I was recording a podcast. They think I was just probably very stressed at work.

[00:01:33.550] – Alex Serman

Well, now you’ll get to share this video with them once it’s out and prove that you weren’t just drinking on the job, but it’s really for business.

[00:01:43.010] – Jason Yule


[00:01:45.010] – Alex Serman

Excellent. Yeah, I’ve got the 16 year old as well here. So now we’ve got them poured, we can give it a go. Cheers.

[00:01:54.430] – Jason Yule


[00:02:00.570] – Alex Serman

Yeah, this is really excellent whiskey. Pretty smoky up on the front end from all that peat, but kind of once you get past it, it’s really smooth. Kind of fruity actually…Kind of whiskey. So you kind of get the normal Islay typical notes that you get from smoke and the peat and some people get like iodine or bandaids, things like that. But once you get past that, I’m really getting some nice sprut notes and just really easy drink if you’re into the smoky whiskeys.

[00:02:39.770] – Jason Yule

No, I agree. I normally drink the Lefroy, but I find that is a lot more, a lot more peaty. And I find this, as you say, definitely has a much sort of fruity finish, which is quite pleasant. It doesn’t feel like you’ve let a full ashtray. It’s more just half an ashtray.

[00:03:02.450] – Alex Serman

It’s funny that this is popularized with my generation here in the US. Because of the TV show Parks and Rec. So Nick Offerman’s character, Ron Swanson, his favorite whiskey is Lagavulin, they had a whole episode where he ends up going to the distillery and having a wonderful time and now he’s a spokesperson for them. And so that originally got me into Lagavulin kind of got me into the Islay and I’ve just dove headfirst into the rest of them going to Lafroy’s like you mentioned in the art bags. But I still think Lagavulin and that’s my home base whenever I’m winning an Islay.

[00:03:38.890] – Jason Yule

No. Agreed. We’ve actually recently I’ve recently been invited to a whiskey club. So about eight to ten of us get together every couple of months and then do a blind tasting. And then at the end of the night, you’ve got to sort of get the whiskey as you write down what you think it is, what you think it tastes like, the whole story. And then at the end they reveal the host of that evening reveals what the five whiskeys were. Normally by the time we get to whiskey number five, the flavors are starting to blend a bit and then by the end of the night, divisions are starting to blend. But it’s a pretty fun exercise. And I have to say, every time, someone always manages to sneak an Islay whisky in there.

[00:04:28.330] – Alex Serman

Oh, that’s awesome. When we get that started over here, that sounds like a really good time.

[00:04:35.070] – Jason Yule


[00:04:36.670] – Alex Serman

Excellent. So now to kind of get into the main part here of the episode. So you mentioned you mostly work with institutional investors, working with helping them reclaim foreign withheld taxes. So can you dive into that a little bit more about what that really looks like and what you and your colleagues do to really add value to your investors?

[00:04:59.990] – Jason Yule

Fantastic. Most definitely. So essentially what our business does at the heart of it is we recover withholding taxes on all foreign direct investment. So where you’ve got institutional investors or private investors who invest into offshore markets that will typically suffer withholding taxes in an array around 30% of the income. In many cases, there will be prime brokers or custodian banks who are supporting the tax recovery thereof. But we find due to administrative challenges, requirements that are being levied by the foreign tax officers and other sort of hurdles that clients are having to deal with, they’re not always getting the full amount of tax recovery. And as a result, our business has found a space in this market where we support clients really either just finding additional value within their portfolio so everything remains as is, and we just look for additional recovery opportunities. Or in some cases where clients are struggling to actually deal with the administration, we actually do the whole back office process for them. So our service takes many forms, but essentially at the heart of it, we are looking to optimize portfolio performance by recovering additional tax.

[00:07:27.350] – Alex Serman

So I know you’re not the only ones in this space. So how do you differentiate yourself from your competitors and really help have that edge when you are adding value to your investors portfolios and helping them maximize their performance?

[00:07:47.230] – Jason Yule

So, I suppose for us, you’ve really got to take it a couple of steps back and look at where we come from as a business. We started in the tax recovery business about 21 years ago, initially recovering VAT or GST taxes on foreign subsistence and travel. And that was the initial business that we started. And over the years, we’ve continued to launch new businesses, recovering different types of taxes. And one of the businesses that was born out of that group is WTax. And WTax has managed to build a really strong business mainly based on the support of our group. So when we look at enhancing and growing our business, we’ve got a lot of sort of inside group knowledge that helps us. And some of the competitive differentiators that we have is that we’ve managed to build a really strong infrastructure that allows us to have sort of feet on the ground in many different tax jurisdictions. So compared to many of our competitors, we’ve got about 40 global offices. So in pretty much every investment jurisdiction where major investors are suffering withholding taxes, we’ve got a presence on the ground which gives us access to local tax authorities.

[00:09:07.840] – Jason Yule

It gives us that local knowhow in house to recover taxes and really gives us quite an enhancement on working with tax authorities to formalize processes and get taxes over the line for investors. And then I think second to that, we built a lot of technology within our business and technology really is at the heart of everything we do. We found that one of our biggest competitive edges is to help speed up the recovery of taxes. And we do this through good technology processes as well as ensuring that investors benefit from that use of technology. So a lot of our technology allows investors to more easily streamline their documentation collection and sort of get really good insight and or oversight, at least on the tax recovery processes. So, you know, just to summarize, it would really set the breadth of our group which provides us with that infrastructure and then sort of deep technology supporting our processes.

[00:10:11.130] – Alex Serman

So you guys are pretty spread out being in 40 different global offices. And so you mentioned the technology that you’re using to help streamline those processes. So could you go into a little bit more about what kind of technology you’re using? Are you looking at AI or ML being able to interpret structured and unstructured data sets? Or does that play a role in how you’re going about recovering these taxes and working with the various tax authorities?

[00:10:40.450] – Jason Yule

Of course, I suppose there’s really two legs to the tax process for us when looking at the two legs, as we’ve got to interact with the intermediaries who deal with our clients to get the actual underlying investment data. And then once we’ve got that data, we then calculate what we can do as a business. And then based on that, we’ve got to interact with the tax authorities to actually go ahead and make these tax refunds. So in the first part, obtaining data and interpreting that data, we’re working on a number of different technologies with custodian banks to integrate and pull that data into a uniform source. And then once we receive the data, there’s a number of different machine learning aspects that we apply within our data processing centers that allow us to quickly interpret, review, and output data into a singular format, which allows us to easily work with it and then take forward the tax recovery process. What we find is that all those algorithms that are now interpreted into our data review processes allows us to quite easily identify anomalies within the data, identify unique tax events that occur. It allows us to split out certain constraints within the data, so we can quite easily determine in a very short space of time exactly how much withholding tax we can recover and what markets where the normal is, where do we expect to pick up errors.

Once we’ve got that data, we can then take the next phase. And the tricky part for us then is now you’re dealing with manual tax offices so we can have all this great data, but then you get to a tax office to want to hard pay a form. What we do in that instance is the technology that we built into those processes as we use technology such as OCR (ptical Recognition Software), which allows us to then take data from client sets and place that onto the tax form so we can pre-populate all that information, allowing us to provide that to the tax offices. Where tax officers are generally trying to turn digital, We’re working closely with them to build direct feeds where we can actually file the taxes directly, work with their portals, and create that link from client data all the way to tax refund data.

[00:13:14.070] – Alex Serman

Okay, that’s excellent. Yeah, I’ve done a few episodes on AI and ML already, and it’s definitely changing the world. So it’s interesting to see the different use cases that you can have for it. So I mean, kind of understanding how you’re able to utilize that with the tax information and prepopulating forms to get the tax authorities being able to streamline client data so that way it’s in a single usable form is really key to being efficient and to being consistent and accurate with the information that you’re getting. So that way you can get that full reclamation.

[00:13:51.310] – Jason Yule

It’s funny you say that on the AI. It’s obviously a topic that’s coming up a lot lately and I’m currently reading a book, I don’t know if you’ve managed to see it or read it. It’s called Life 3.0, and they sort of take you through the journey of AI and what it really means to mankind today and how AI will most likely change our lives whether we’re ten years away or 100 years away and what that looks like, and it’s a pretty fascinating read about halfway now, but it really takes you to that end journey of where AI could be.

[00:14:28.210] – Alex Serman

Absolutely. I’ll need to get myself a copy of that. That sounds right up my alley. Jason, you’re the head of Sales and Strategy for North America, and so obviously you’re based in London. So what’s been some of your biggest challenges or some of your biggest opportunities when working in the North American market? And are you finding differences, I guess as you’re working through the various North American countries such as Canada, the US, Mexico? Just dive into that a little bit for me.

[00:14:59.750] – Jason Yule

Fantastic. So looking into some of the challenges, when I joined the business four years ago, we were still relatively new within the US market. We had a handful of people on the ground and I was hired into our London office with the sort of key objective of helping to strengthen our US footprint. And in breaking into market, we came against some pretty steep competition, we came across some pretty big barriers. And I found the hardest thing was really breaking into market. It was going against a very sort of bureaucratic investment sort of industry where there were a bunch of processes and formalities that had to be followed. So you’re going to a client and saying, this is an issue that we foresee, and they would then go to their custody bank and speak about it. And that was often met with resistance. So there was a lot of work that we had to do with firstly educating the market, then dealing closely with the custody banks, working closely with consultants and similar industry insiders to make sure that we were going about the right way, we were educating the market at the right pace. And I think we’ve managed to find that balance. Now it there’s a lot of learning that we’ve had to do as a business and I think it’s really we’ve managed to build a really good business and I would say with caution, become one of the sort of known industry participants. But there was a lot of ups and downs in getting to that step. So it’s really nice to look back now and we go to conferences and see a lot of our clients and they super happy with the work we’re doing and enjoy working with us. And that it’s always an encouraging feeling to know that four years ago you were still trying to connect a lot of these dots.

[00:17:08.910] – Alex Serman

Absolutely. That’s awesome to get that immediate feedback when you’re at a conference or something and you run into a client and they tell you how much they enjoy working with you, that’s always a wonderful feeling. It’s great that even within four years you were able to really break into the market and gotten a nice foothold here in North America. And being able to kind of address those needs and help educate the market feel like that’s pretty significant being able to do that in just four years. So that’s great. And part of that foothold North America. So recently, First Rate and WTax have partnered together to help support First Rate customers and being able to help reclaim their form withheld taxes. And so if you’re listening to this and you’re interested in learning more about what First Rate and WTax are doing together to add value to your clients portfolios and maximize that performance, please reach out to me. Happy to discuss more with you on that. So Jason, it’s been really wonderful talking with you today and a wonderful choice here on the Whiskey. Always happy to get another bottle of Lagavulin for the collection, but really appreciate your time this morning and thank you again for tuning in to Whiskey and WealthTech and we’ll catch you next time.

[00:18:32.810] – Jason Yule

Fantastic, Alex, it was really good to be here and thanks for helping me start my sort of Thursday Whiskey a bit earlier than usual.

[00:18:45.470] – Alex Serman


[00:18:46.610] – Jason Yule


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