One minute with Dominic Foulkes, partner at Davis Polk.
What’s keeping you busy at work?
A healthy mix of transactional and tax consultancy matters. I am fortunate to benefit from a fantastic platform at my firm for large corporate work – Natura’s sale of Aesop to L’Oréal, and the US IPO of ARM have been recent highlights. My in-tray the past year has reflected macroeconomic trends – an uptick in financial restructurings, distressed M&A, and refinancing transactions, while capital markets work has been quieter. The growing role of alternative (non-bank) financing sources has been a noticeable trend.
If you could make one change to a tax law or practice, what would it be?
I’m picking two. The length of judicial decisions in tax cases has got out of hand. It is commonplace for first instance judgments to take up 60, 80, 100 pages and more, and for appeal judgments to run past 30. The tendency of judges to rehearse the material in painstaking detail (often reproducing transcript material from the hearing) is both tedious and no guarantee of the correct principle either being identified or applied accurately to the facts (VAR anyone?). One has only to read the majestic tax judgments of a Greene, a Radcliffe or a Millett to realise quite how unnecessary this all is.
A further plea is to improve the quality of explanatory notes to the Finance Acts, which have become to my mind largely pointless documents. It is hard to imagine any adviser or indeed parliamentarian receiving illumination from the explanatory notes to the multinational top-up tax or the anti-hybrid rules that could not be gleaned from reading the law itself. Given the ever-proliferating introduction of complex new tax regimes – and that HMRC’s own guidance on them cannot generally be relied on by taxpayers in litigation – a wider reassessment of the role of explanatory notes as interpretive aids, alongside other perhaps more useful techniques (such as HMRC guidance published under the terms of a statutory framework – see the Criminal Finances Act or the GAAR) would I think be useful.
What do you know now that you wish you’d known at the start of your career?
Perhaps that it pays to be patient. The most important quality of a professional adviser – good judgment – is something that for most of us can only be expected to come with time, as you acquire technical skills, commercial experience and learn from those around you. The other would be to appreciate early the many advantages that come from knowing when to keep your mouth shut.
Has a recent tax case caught your eye?
The development of the unallowable purpose case law in JTI and BlackRock Holdco has been interesting to follow. Much intellectual energy has been applied to questions such as whose purposes matter, how evidence of a company’s purposes is best to be assessed, whether purposes can be inferred from inextricable consequences and so on. Rather less attention is given to whether it is desirable, at least in a corporate tax setting, to tax economically identical transactions differently depending upon what may be divined about the subjective intentions of members of the board. These rules make it very challenging to advise sophisticated clients on large commercial transactions where tax is expected to be taken into account alongside other relevant factors. Judicial musings about ‘icing on the cake’ or whether ‘main’ means more than trivial (or more than more than trivial?) do not always greatly assist. An approach of following the commercial accounts – with a properly applied GAAR, keying off more objective indicators, to defend against avoidance cases – seems to me a more businesslike and rational system.
You might not know this about me but...
As a younger man I had a keen interest in literature and vaguely contemplated a literary career (something I am occasionally teased about – tax lawyers have good memories). Though the passing years have entirely extinguished these more rarefied tastes, they have left undiminished my teenage addiction to hiphop music – still my daily escapism on the way home from work.
One minute with Dominic Foulkes, partner at Davis Polk.
What’s keeping you busy at work?
A healthy mix of transactional and tax consultancy matters. I am fortunate to benefit from a fantastic platform at my firm for large corporate work – Natura’s sale of Aesop to L’Oréal, and the US IPO of ARM have been recent highlights. My in-tray the past year has reflected macroeconomic trends – an uptick in financial restructurings, distressed M&A, and refinancing transactions, while capital markets work has been quieter. The growing role of alternative (non-bank) financing sources has been a noticeable trend.
If you could make one change to a tax law or practice, what would it be?
I’m picking two. The length of judicial decisions in tax cases has got out of hand. It is commonplace for first instance judgments to take up 60, 80, 100 pages and more, and for appeal judgments to run past 30. The tendency of judges to rehearse the material in painstaking detail (often reproducing transcript material from the hearing) is both tedious and no guarantee of the correct principle either being identified or applied accurately to the facts (VAR anyone?). One has only to read the majestic tax judgments of a Greene, a Radcliffe or a Millett to realise quite how unnecessary this all is.
A further plea is to improve the quality of explanatory notes to the Finance Acts, which have become to my mind largely pointless documents. It is hard to imagine any adviser or indeed parliamentarian receiving illumination from the explanatory notes to the multinational top-up tax or the anti-hybrid rules that could not be gleaned from reading the law itself. Given the ever-proliferating introduction of complex new tax regimes – and that HMRC’s own guidance on them cannot generally be relied on by taxpayers in litigation – a wider reassessment of the role of explanatory notes as interpretive aids, alongside other perhaps more useful techniques (such as HMRC guidance published under the terms of a statutory framework – see the Criminal Finances Act or the GAAR) would I think be useful.
What do you know now that you wish you’d known at the start of your career?
Perhaps that it pays to be patient. The most important quality of a professional adviser – good judgment – is something that for most of us can only be expected to come with time, as you acquire technical skills, commercial experience and learn from those around you. The other would be to appreciate early the many advantages that come from knowing when to keep your mouth shut.
Has a recent tax case caught your eye?
The development of the unallowable purpose case law in JTI and BlackRock Holdco has been interesting to follow. Much intellectual energy has been applied to questions such as whose purposes matter, how evidence of a company’s purposes is best to be assessed, whether purposes can be inferred from inextricable consequences and so on. Rather less attention is given to whether it is desirable, at least in a corporate tax setting, to tax economically identical transactions differently depending upon what may be divined about the subjective intentions of members of the board. These rules make it very challenging to advise sophisticated clients on large commercial transactions where tax is expected to be taken into account alongside other relevant factors. Judicial musings about ‘icing on the cake’ or whether ‘main’ means more than trivial (or more than more than trivial?) do not always greatly assist. An approach of following the commercial accounts – with a properly applied GAAR, keying off more objective indicators, to defend against avoidance cases – seems to me a more businesslike and rational system.
You might not know this about me but...
As a younger man I had a keen interest in literature and vaguely contemplated a literary career (something I am occasionally teased about – tax lawyers have good memories). Though the passing years have entirely extinguished these more rarefied tastes, they have left undiminished my teenage addiction to hiphop music – still my daily escapism on the way home from work.
