One minute with Daniel Kennedy, Partner in the tax team at Shoosmiths LLP.
What’s keeping you busy at work?
I spend most of my time advising on property tax issues and, whilst there has been a general slow-down in the sector, my colleagues in our real estate team are still keeping me busy with the usual array of investment transactions, developments and lettings. Build-to-rent and single-family housing developments have been some of the particularly interesting transactions in recent years.
What do you know now that you wish you’d known at the start of your career?
Two things spring to mind.
The first was a tip which I read a number of years ago in one of the Tax Journal’s ‘One minute with’ series. When reviewing legislation or legal documents, be sure to read to the very end of the relevant clause, section, chapter or part of the legislation/document. Otherwise you risk overlooking important caveats or provisos.
Secondly, perspective is so important. This can apply in numerous different ways, such as ensuring you have an understanding of the client’s commercial objectives, so avoiding a situation where time is spent analysing a challenging theoretical question only for the answer to be irrelevant or to lead to an uncommercial outcome. But it can also be applied to ensure that you are placing your professional life in the correct perspective when set against life’s other competing priorities.
Are there any new rules that are causing a problem?
Having lobbied HMRC for a number of years for changes to the Construction Industry Scheme (CIS) as it applies to payments from landlords to tenants, I thought that the announcement that reg 20A to the Construction Industry Scheme (Regulations), SI 2005/2045, was to be introduced would finally mean that the CIS would not impact simple letting transactions.
However, in the event, the drafting of the legislation is narrower than hoped and, frustratingly, the very recently published HMRC guidance on the topic confirms that they are unlikely to adopt a pragmatic interpretation of the legislation in practice. During the consultation period, it was put forward by stakeholders that there are many compelling commercial, legal, logistical and environmental reasons why a landlord and tenant might agree that a tenant will undertake works to a building which one would normally expect a landlord to carry out, but the emphasis in the legislation on the works needing to be primarily for the benefit of the tenant will mean that some transactions will continue to be caught by the CIS. Having waited so long for a change to the legislation to remove a potential tax barrier to letting transactions, it is very disappointing for the outcome to be that we are still required to closely analyse those transactions and with some still impacted by the application of the withholding tax regime.
Has a recent tax case caught your eye?
I have been following the large number of SDLT cases dealing with the related topics of (a) the distinction between residential and non-residential property and (b) how to identify whether a property contains more than one ‘dwelling’. While the latter has been made largely redundant with the abolition of Multiple Dwellings Relief, the former question remains a real grey area on which we are required to advise on a weekly basis. The case law has given us a lot of helpful dicta, but the analysis remains fact specific and it is an area that remains fraught with difficulty.
You might not know this about me but...
I have come full circle, from undertaking work experience in the mail room at Shoosmiths (then Shoosmiths & Harrison) as a wide-eyed 16-year-old, to now being a partner in the firm. My lasting memory from the work experience week was (showing my age now) being asked to type addresses onto envelopes using an old-fashioned typewriter. Having previously done very little in the way of typing, I made error after error with the result that many envelopes had to be discarded into the bin. Every month, I still expect to see a deduction to my pay packet for stationery charges...
One minute with Daniel Kennedy, Partner in the tax team at Shoosmiths LLP.
What’s keeping you busy at work?
I spend most of my time advising on property tax issues and, whilst there has been a general slow-down in the sector, my colleagues in our real estate team are still keeping me busy with the usual array of investment transactions, developments and lettings. Build-to-rent and single-family housing developments have been some of the particularly interesting transactions in recent years.
What do you know now that you wish you’d known at the start of your career?
Two things spring to mind.
The first was a tip which I read a number of years ago in one of the Tax Journal’s ‘One minute with’ series. When reviewing legislation or legal documents, be sure to read to the very end of the relevant clause, section, chapter or part of the legislation/document. Otherwise you risk overlooking important caveats or provisos.
Secondly, perspective is so important. This can apply in numerous different ways, such as ensuring you have an understanding of the client’s commercial objectives, so avoiding a situation where time is spent analysing a challenging theoretical question only for the answer to be irrelevant or to lead to an uncommercial outcome. But it can also be applied to ensure that you are placing your professional life in the correct perspective when set against life’s other competing priorities.
Are there any new rules that are causing a problem?
Having lobbied HMRC for a number of years for changes to the Construction Industry Scheme (CIS) as it applies to payments from landlords to tenants, I thought that the announcement that reg 20A to the Construction Industry Scheme (Regulations), SI 2005/2045, was to be introduced would finally mean that the CIS would not impact simple letting transactions.
However, in the event, the drafting of the legislation is narrower than hoped and, frustratingly, the very recently published HMRC guidance on the topic confirms that they are unlikely to adopt a pragmatic interpretation of the legislation in practice. During the consultation period, it was put forward by stakeholders that there are many compelling commercial, legal, logistical and environmental reasons why a landlord and tenant might agree that a tenant will undertake works to a building which one would normally expect a landlord to carry out, but the emphasis in the legislation on the works needing to be primarily for the benefit of the tenant will mean that some transactions will continue to be caught by the CIS. Having waited so long for a change to the legislation to remove a potential tax barrier to letting transactions, it is very disappointing for the outcome to be that we are still required to closely analyse those transactions and with some still impacted by the application of the withholding tax regime.
Has a recent tax case caught your eye?
I have been following the large number of SDLT cases dealing with the related topics of (a) the distinction between residential and non-residential property and (b) how to identify whether a property contains more than one ‘dwelling’. While the latter has been made largely redundant with the abolition of Multiple Dwellings Relief, the former question remains a real grey area on which we are required to advise on a weekly basis. The case law has given us a lot of helpful dicta, but the analysis remains fact specific and it is an area that remains fraught with difficulty.
You might not know this about me but...
I have come full circle, from undertaking work experience in the mail room at Shoosmiths (then Shoosmiths & Harrison) as a wide-eyed 16-year-old, to now being a partner in the firm. My lasting memory from the work experience week was (showing my age now) being asked to type addresses onto envelopes using an old-fashioned typewriter. Having previously done very little in the way of typing, I made error after error with the result that many envelopes had to be discarded into the bin. Every month, I still expect to see a deduction to my pay packet for stationery charges...
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