One minute with Emma Baylis, managing director at Interpath Advisory.
What’s keeping you busy at work?
My role at Interpath is focused on transactions where certainty of tax treatment is highly prized. With a general election looming, the prospect of uncertainty over tax changes increases so I am seeing a drive to execute transactions during 2024 which means I’m doing a lot of M&A readiness work.
What do you know now that you wish you’d known at the start of your career?
I actually chose a career in tax, partly because I enjoyed the frequency of change of rules and case law and how the whole profession was ever-evolving. However, what I had less appreciation for then was the amount of complexity that constant change gives rise to!
Of course, many changes can seem worthy in isolation but, when looked at in totality, in my view, the system is now too complex. Whilst there are some areas where HMRC is improving guidance, even as tax advisers, sometimes the only option to gain certainty is litigation which seems unduly inefficient and costly – for both the taxpayer and HMRC.
The amount of complexity is actually the reason I admired the work of the Office of Tax Simplification and wanted to be part of the tax simplification agenda, especially to help support unrepresented taxpayers and SMEs. Although the OTS no longer exists, I really enjoyed my time there when I worked on its final review into hybrid working which was an important project engaging with businesses and taxpayers on an evolving working practice. Many of the OTS’ recommendations were adopted over the years and I hope to see its aims continued in the future.
Has a recent tax case caught your eye?
I’ve been following the development of ‘unallowable purpose’ cases, such as HMRC v BlackRock Holdco 5 [2022] UKUT 199 (TCC), with interest. Many readers will know that this case concerns the deductibility of interest in a company used to fund an acquisition. The use of intercompany debt structures is an extremely commonplace way of funding transactions and, whilst I agree that preventing double deductions or wholly uncommercial transactions is reasonable, there are many situations where the use of debt to fund an acquisition is a valid and proportionate commercial purpose.
Especially in the higher interest environment we’re in now, obtaining full deductibility for interest costs is increasingly important for taxpayers – and it’s clear from BlackRock and other recent cases, such as Kwik-Fit Group Ltd v HMRC [2022] UKUT 314 (TCC), that the courts are giving teeth to the unallowable purpose test. Updated HMRC guidance in this area is somewhat helpful but taxpayers wishing to use debt push-downs in even what might appear to be wholly commercial cases will still be concerned about this developing area.
And finally, you might not know this about me but…
When I was growing up, I wanted to be Head of MI5! That was because Dame Stella Rimington (former director general of MI5) was a previous head girl at my school. Sadly, I wasn’t destined for that particular career but it did teach me early on the importance of role models which I’ve tried to bring into my own advocacy of social mobility and inclusion.
On which note, I am passionate about getting young people better educated on the tax system and how it works as well as more interested in the tax profession as a career. I am not a graduate so didn’t have the full range of career options available when I left school which mean that (fortunately) I stumbled into a career in tax almost by accident. I’d like to see the tax system better understood in society. I think the lack of understanding gives rise to a lack of trust, whereas I’d like to see more pride in the tax system and what it delivers.
One minute with Emma Baylis, managing director at Interpath Advisory.
What’s keeping you busy at work?
My role at Interpath is focused on transactions where certainty of tax treatment is highly prized. With a general election looming, the prospect of uncertainty over tax changes increases so I am seeing a drive to execute transactions during 2024 which means I’m doing a lot of M&A readiness work.
What do you know now that you wish you’d known at the start of your career?
I actually chose a career in tax, partly because I enjoyed the frequency of change of rules and case law and how the whole profession was ever-evolving. However, what I had less appreciation for then was the amount of complexity that constant change gives rise to!
Of course, many changes can seem worthy in isolation but, when looked at in totality, in my view, the system is now too complex. Whilst there are some areas where HMRC is improving guidance, even as tax advisers, sometimes the only option to gain certainty is litigation which seems unduly inefficient and costly – for both the taxpayer and HMRC.
The amount of complexity is actually the reason I admired the work of the Office of Tax Simplification and wanted to be part of the tax simplification agenda, especially to help support unrepresented taxpayers and SMEs. Although the OTS no longer exists, I really enjoyed my time there when I worked on its final review into hybrid working which was an important project engaging with businesses and taxpayers on an evolving working practice. Many of the OTS’ recommendations were adopted over the years and I hope to see its aims continued in the future.
Has a recent tax case caught your eye?
I’ve been following the development of ‘unallowable purpose’ cases, such as HMRC v BlackRock Holdco 5 [2022] UKUT 199 (TCC), with interest. Many readers will know that this case concerns the deductibility of interest in a company used to fund an acquisition. The use of intercompany debt structures is an extremely commonplace way of funding transactions and, whilst I agree that preventing double deductions or wholly uncommercial transactions is reasonable, there are many situations where the use of debt to fund an acquisition is a valid and proportionate commercial purpose.
Especially in the higher interest environment we’re in now, obtaining full deductibility for interest costs is increasingly important for taxpayers – and it’s clear from BlackRock and other recent cases, such as Kwik-Fit Group Ltd v HMRC [2022] UKUT 314 (TCC), that the courts are giving teeth to the unallowable purpose test. Updated HMRC guidance in this area is somewhat helpful but taxpayers wishing to use debt push-downs in even what might appear to be wholly commercial cases will still be concerned about this developing area.
And finally, you might not know this about me but…
When I was growing up, I wanted to be Head of MI5! That was because Dame Stella Rimington (former director general of MI5) was a previous head girl at my school. Sadly, I wasn’t destined for that particular career but it did teach me early on the importance of role models which I’ve tried to bring into my own advocacy of social mobility and inclusion.
On which note, I am passionate about getting young people better educated on the tax system and how it works as well as more interested in the tax profession as a career. I am not a graduate so didn’t have the full range of career options available when I left school which mean that (fortunately) I stumbled into a career in tax almost by accident. I’d like to see the tax system better understood in society. I think the lack of understanding gives rise to a lack of trust, whereas I’d like to see more pride in the tax system and what it delivers.
