One minute with Claire Miles, partner in the tax group at Watson Farley & Williams LLP.
What’s keeping you busy at work?
We are restructuring a couple of international shipping groups which generates lots of interesting issues given the number of companies and variety of jurisdictions involved. I have also been looking at the tax treatment of certain receipts of an energy company in administration, alongside a steady flow of M&A and financing work.
If you could make one change to tax, what would it be?
I’d like to suggest two changes. First, I would simplify the substantial shareholdings exemption. We can spend five minutes looking at a group structure and say we think it is trading. But to give proper advice on how the SSE applies to an international group with lots of joint venture interests comprising different sized stakes held through many different sorts of international structures (some with, some without share capital) takes a huge amount of time. We look at the letter of the legislation and at all the established practice as well as HMRC guidance. In some places, HMRC’s guidance is helpfully more relaxed than the legislation (e.g. for interests that are not qualifying joint ventures, but which complement wider group activities) but it would be better to simplify the law. Particularly because HMRC no longer offers a routine clearance service, I think the SSE should be reshaped into a simpler form of participation exemption.
Second, I’d include a safe harbour in the hybrids rules for situations where there is absolutely no tax avoidance going on. Even commercially simple arrangements, such as interest rate hedges held by parent companies, can create hybrid problems.
What do you know now that you wish you’d known at the start of your career?
I wish there was a bit more candour about the realities of juggling a career and young family with both parents working full time. From all-consuming imposter syndrome after maternity leave to bouncing my newborn for 30 minutes so I could (breathlessly) speak on an HMRC consultation call to convincing a disbelieving NY partner at midnight that the UK really does impose an interest withholding tax (while my poorly baby screamed in the background), there have been some tough moments. It all happens beneath the professional veneer, so it seems like everyone else is doing fine, which in turn made me feel like I was doing it wrong. Now I’m out of the hardest phase, I look back and think it really was tough! I am pleased I stuck with being a tax lawyer though and I am so grateful to have supportive colleagues.
Are there any new rules that are causing a particular problem in practice?
For our maritime clients, the GloBE rules present some challenges. Many jurisdictions worldwide have their own tonnage tax regimes, and these are all necessarily different from one another and different from the provisions in the Pillar Two rules. Many shipping groups are looking to undertake group reorganisations to move assets and functions. However, the intricacies of how Pillar Two will be applied in many jurisdictions is very much unknown which means that, even in the midst of the reorganisation, there remains a high level of uncertainty as to how the group will be taxed.
Has a recent tax case caught your eye?
I have been interested in the Bluecrest decision, in particular the meaning of ‘significant influence’. Recently, I have found the technical reasoning of some judgments a bit hard to follow and feel the conclusion may have been reached before the rationale. In contrast, the FTT’s decision in Bluecrest seemed to me to be entirely sensible and based on a natural interpretation of the legislation. I am pleased it has been upheld.
What are clients currently asking about?
As a theme, many groups are interested in rationalising their corporate holding structures. There are different drivers to this which can depend on the application of GloBE and the jurisdictions involved. For example, the forthcoming changes to Dutch dividend withholding taxes can create possible issues for cash extraction in structures where the ‘ultimate parent’ is a fund vehicle in a tax haven. As above, uncertainty about how new laws will be applied in practice is also a problem.
Finally, you might not know this about me but…
I really enjoy scuba diving and have done over 70 dives across three continents. It’s a hobby that is somewhat on hold while we have little ones but my four year old told me the other day that ‘when I am ten’ he would like to join me on dives ‘down to the midnight zone’!
One minute with Claire Miles, partner in the tax group at Watson Farley & Williams LLP.
What’s keeping you busy at work?
We are restructuring a couple of international shipping groups which generates lots of interesting issues given the number of companies and variety of jurisdictions involved. I have also been looking at the tax treatment of certain receipts of an energy company in administration, alongside a steady flow of M&A and financing work.
If you could make one change to tax, what would it be?
I’d like to suggest two changes. First, I would simplify the substantial shareholdings exemption. We can spend five minutes looking at a group structure and say we think it is trading. But to give proper advice on how the SSE applies to an international group with lots of joint venture interests comprising different sized stakes held through many different sorts of international structures (some with, some without share capital) takes a huge amount of time. We look at the letter of the legislation and at all the established practice as well as HMRC guidance. In some places, HMRC’s guidance is helpfully more relaxed than the legislation (e.g. for interests that are not qualifying joint ventures, but which complement wider group activities) but it would be better to simplify the law. Particularly because HMRC no longer offers a routine clearance service, I think the SSE should be reshaped into a simpler form of participation exemption.
Second, I’d include a safe harbour in the hybrids rules for situations where there is absolutely no tax avoidance going on. Even commercially simple arrangements, such as interest rate hedges held by parent companies, can create hybrid problems.
What do you know now that you wish you’d known at the start of your career?
I wish there was a bit more candour about the realities of juggling a career and young family with both parents working full time. From all-consuming imposter syndrome after maternity leave to bouncing my newborn for 30 minutes so I could (breathlessly) speak on an HMRC consultation call to convincing a disbelieving NY partner at midnight that the UK really does impose an interest withholding tax (while my poorly baby screamed in the background), there have been some tough moments. It all happens beneath the professional veneer, so it seems like everyone else is doing fine, which in turn made me feel like I was doing it wrong. Now I’m out of the hardest phase, I look back and think it really was tough! I am pleased I stuck with being a tax lawyer though and I am so grateful to have supportive colleagues.
Are there any new rules that are causing a particular problem in practice?
For our maritime clients, the GloBE rules present some challenges. Many jurisdictions worldwide have their own tonnage tax regimes, and these are all necessarily different from one another and different from the provisions in the Pillar Two rules. Many shipping groups are looking to undertake group reorganisations to move assets and functions. However, the intricacies of how Pillar Two will be applied in many jurisdictions is very much unknown which means that, even in the midst of the reorganisation, there remains a high level of uncertainty as to how the group will be taxed.
Has a recent tax case caught your eye?
I have been interested in the Bluecrest decision, in particular the meaning of ‘significant influence’. Recently, I have found the technical reasoning of some judgments a bit hard to follow and feel the conclusion may have been reached before the rationale. In contrast, the FTT’s decision in Bluecrest seemed to me to be entirely sensible and based on a natural interpretation of the legislation. I am pleased it has been upheld.
What are clients currently asking about?
As a theme, many groups are interested in rationalising their corporate holding structures. There are different drivers to this which can depend on the application of GloBE and the jurisdictions involved. For example, the forthcoming changes to Dutch dividend withholding taxes can create possible issues for cash extraction in structures where the ‘ultimate parent’ is a fund vehicle in a tax haven. As above, uncertainty about how new laws will be applied in practice is also a problem.
Finally, you might not know this about me but…
I really enjoy scuba diving and have done over 70 dives across three continents. It’s a hobby that is somewhat on hold while we have little ones but my four year old told me the other day that ‘when I am ten’ he would like to join me on dives ‘down to the midnight zone’!
