One minute with John Barnett, partner, Burges Salmon
How did you end up in tax?
Largely by accident. My degree was in politics and philosophy. Not many jobs there. Law seemed the least bad alternative. Once at Burges Salmon, I not only discovered that tax was a career, but that it was done by lawyers as well as accountants.
Who do you most admire in tax?
Hard to choose, but I guess John Whiting. He has such a breadth of tax knowledge across the whole range of personal, corporate and international tax and manages to be able to explain it all so simply. He also has the unique trick of being respected by both the profession and HMRC/the government. I am only sorry that he retired as CIOT policy director about ten years’ earlier than would have fitted my master-plan to try and succeed him!
Looking back on your career, what’s the key lesson you’ve learnt?
Slightly worried that I’m being asked to look ‘back’ on my career: hopefully more of it is still in front of me! On a practical level, never telephone someone if you can go and see them in person instead. Within the discipline of taxation, always try and work out what the answer ought to be before you try to analyse the legislation. In 90% of cases, it will give you the right answer.
Is there a problem in practice you come across time and again?
Generically, the remittance basis for non-doms. Why design a relief which encourages wealthy foreigners to come but to leave their money behind? And why define your target audience as including those who may have lived in the UK for two or three generations? Many of the complexities of the remittance basis – and much of the political sting – could be removed if we had a sensible debate about re-designing sensible reliefs in this area.
You were a member of the GAAR interim panel. How do you see the GAAR developing?
I was initially a strong critic of the GAAR, but sitting on the interim panel convinced me that it should – to quote the Ronseal adverts – do exactly what it says on the tin, namely to tackle the most flagrant schemes. I think that HMRC will be slow to use it, particularly in the early stages. I think they see it very much as a nuclear weapon. Such weapons are best as a deterrent rather than used in anger.
The big uncertainty at the moment is what ‘reasonable’ means when it comes to tax. Until we get a decade or so of precedent under our belt there will inevitably be some uncertainty. However, most practitioners can take comfort from the fact that HMRC will be slow to deploy the GAAR.
Are there any provisions in the tax code which are of particular concern to your clients?
The business investment relief rules for non-doms are (within the context of a flawed policy – see above) generally a sensible idea: encouraging investment into the UK. However, the legislation doesn’t quite work properly and several provisions, particularly the rules on ‘involved companies’.
The Finance Bill: what are the points to watch?
It was good to see a Finance Bill without too many surprises as most of it had been trailed in advance. The rules on follower cases are one of the nastiest provisions. One can see why HMRC wants to clear the backlog, but the usual safeguards are missing. The only ways to avoid HMRC’s unilateral action seem to be judicial review of HMRC’s decision that the judicial ruling is ‘relevant’ or paying the 50% penalty and continuing with the substantive appeal.
Would a better system not be for HMRC, at the end of a case, to have the right to ask the judge whether it is ‘apt for follower notices’? The judge could then specify what features a follower-case would need to have before it was on all-fours with the lead case. The problem is well illustrated by film schemes. HMRC seems to be saying that the Eclipse case means that all film schemes don’t work. Yet that decision was heavily fact-dependent. It should be for a judge to certify the conditions for a follower case before HMRC can challenge it.
If you could make one change to UK tax law, what would it be?
Introduce a reverse-GAAR – what someone dubbed a GORILLA (Grant Of Relief If it Looks Like Another). The Mayes case shows what happens when people game the rules – and the GAAR rightly tackles those. But there have been many cases (Joost Lobler, Shanthiratnam, Cleghorn) where individuals have got the same rules wrong and have triggered tax charges of several thousand percent as a result. It ought to be possible to introduce a GORILLA which would give the courts some discretion to overturn manifest injustices like this. All the advantage seems to be with HMRC.
Tell us a secret about yourself.
I am a secret Angry-Birds fan and have been in the top 1,000 players worldwide (out of about 34m).
One minute with John Barnett, partner, Burges Salmon
How did you end up in tax?
Largely by accident. My degree was in politics and philosophy. Not many jobs there. Law seemed the least bad alternative. Once at Burges Salmon, I not only discovered that tax was a career, but that it was done by lawyers as well as accountants.
Who do you most admire in tax?
Hard to choose, but I guess John Whiting. He has such a breadth of tax knowledge across the whole range of personal, corporate and international tax and manages to be able to explain it all so simply. He also has the unique trick of being respected by both the profession and HMRC/the government. I am only sorry that he retired as CIOT policy director about ten years’ earlier than would have fitted my master-plan to try and succeed him!
Looking back on your career, what’s the key lesson you’ve learnt?
Slightly worried that I’m being asked to look ‘back’ on my career: hopefully more of it is still in front of me! On a practical level, never telephone someone if you can go and see them in person instead. Within the discipline of taxation, always try and work out what the answer ought to be before you try to analyse the legislation. In 90% of cases, it will give you the right answer.
Is there a problem in practice you come across time and again?
Generically, the remittance basis for non-doms. Why design a relief which encourages wealthy foreigners to come but to leave their money behind? And why define your target audience as including those who may have lived in the UK for two or three generations? Many of the complexities of the remittance basis – and much of the political sting – could be removed if we had a sensible debate about re-designing sensible reliefs in this area.
You were a member of the GAAR interim panel. How do you see the GAAR developing?
I was initially a strong critic of the GAAR, but sitting on the interim panel convinced me that it should – to quote the Ronseal adverts – do exactly what it says on the tin, namely to tackle the most flagrant schemes. I think that HMRC will be slow to use it, particularly in the early stages. I think they see it very much as a nuclear weapon. Such weapons are best as a deterrent rather than used in anger.
The big uncertainty at the moment is what ‘reasonable’ means when it comes to tax. Until we get a decade or so of precedent under our belt there will inevitably be some uncertainty. However, most practitioners can take comfort from the fact that HMRC will be slow to deploy the GAAR.
Are there any provisions in the tax code which are of particular concern to your clients?
The business investment relief rules for non-doms are (within the context of a flawed policy – see above) generally a sensible idea: encouraging investment into the UK. However, the legislation doesn’t quite work properly and several provisions, particularly the rules on ‘involved companies’.
The Finance Bill: what are the points to watch?
It was good to see a Finance Bill without too many surprises as most of it had been trailed in advance. The rules on follower cases are one of the nastiest provisions. One can see why HMRC wants to clear the backlog, but the usual safeguards are missing. The only ways to avoid HMRC’s unilateral action seem to be judicial review of HMRC’s decision that the judicial ruling is ‘relevant’ or paying the 50% penalty and continuing with the substantive appeal.
Would a better system not be for HMRC, at the end of a case, to have the right to ask the judge whether it is ‘apt for follower notices’? The judge could then specify what features a follower-case would need to have before it was on all-fours with the lead case. The problem is well illustrated by film schemes. HMRC seems to be saying that the Eclipse case means that all film schemes don’t work. Yet that decision was heavily fact-dependent. It should be for a judge to certify the conditions for a follower case before HMRC can challenge it.
If you could make one change to UK tax law, what would it be?
Introduce a reverse-GAAR – what someone dubbed a GORILLA (Grant Of Relief If it Looks Like Another). The Mayes case shows what happens when people game the rules – and the GAAR rightly tackles those. But there have been many cases (Joost Lobler, Shanthiratnam, Cleghorn) where individuals have got the same rules wrong and have triggered tax charges of several thousand percent as a result. It ought to be possible to introduce a GORILLA which would give the courts some discretion to overturn manifest injustices like this. All the advantage seems to be with HMRC.
Tell us a secret about yourself.
I am a secret Angry-Birds fan and have been in the top 1,000 players worldwide (out of about 34m).
