One minute with Giles Hambly, Head of Tax Insurance at Gallagher.
What’s keeping you busy at work?
Having just recovered from the usual end of year rush to get policies in place tied to transactions closing (most sellers want to avoid providing an indemnity), I have an exciting variety of risks on my desk, including risks from sub-Saharan Africa, Germany, Turkey, the Middle East and the UK.
If you could make one change to a tax law or practice, what would it be?
Advance tax payments – a number of jurisdictions apply something akin to a ‘pay to play’ rule, such that where a position is challenged and then assessed by a tax authority, the taxpayer is required to put up a percentage of the tax assessed to be able to defend the challenge. In limited scenarios this may be warranted, however it may have the unfortunate consequence of encouraging tax authorities to be more aggressive. There are certain jurisdictions where, allegedly, tax inspectors’ ‘KPIs’ are based on how much revenue they bring in (including through advance tax payments); this may arguably incentivise aggressive tax authority behaviour.
What do you know now that you wish you’d known at the start of your career?
Three things. First, it’s important to build a strong grounding in the principles of tax. Second, relationships are critical to an adviser’s success. And third, stay focused on your own career, not the careers of your peers. Everyone’s journey in this profession is different and often runs at different speeds – that is OK.
Are there any new rules that are causing a particular problem?
The Pillar Two rules and how they will impact transactions which are being insured. There’s concern from clients that warranty & indemnity insurance will seek to exclude these risks as a standard starting position. This concern is valid. Until the application of the rules becomes clearer and, to some degree, tested, clients will need to seek bespoke tax insurance solutions to get comfort. Thankfully, the tax insurance market is competitive enough to design bespoke insurance solutions for these risks.
Has a recent tax case caught your eye?
The BlueCrest decision in the Upper Tribunal (HMRC v Bluecrest Capital Management (UK) LLP [2023] UKUT 232 (TCC)) is of significant interest. The insurance market (and their advisers) did not expect a decision in favour of the taxpayer. It will be very interesting to see how this plays out in the Court of Appeal as it is likely to have a significant impact on how alternative investment funds are run. It’s a classic case of ‘one size does not fit all’ when applying tax legislation.
Tell us something about tax insurance we don’t already know.
Tax insurance is not limited to risks arising in an M&A context. Tax insurance can cover: operational tax risks (both historic and forward-looking), transfer pricing, risks under audit, risks in active litigation, risks associated with restructures, and risks associated with administration proceedings. There are very few limitations to how tax insurance can be applied to provide bespoke solutions for a variety of risks. It usually requires a broker to work with an insurer to think laterally or creatively about how to design a solution that works.
Finally, you might not know this about me but…
I moved to London from Sydney 10 years ago, and shortly after I met my Ecuadorean wife at a flatshare and got married within six months. I now have the pleasure of spending Christmases in the warmth of Ecuador and I have a son whom I’m pretty sure understands more Spanish than English, or at least he’s happy to give me a blank face when I’m asking him to do something. I enjoy spending time in Quito with an incredibly large and warm family (my father-in-law is one of 12). It also gives me the opportunity to spread the word on tax insurance and push the application of the product in jurisdictions the market is less familiar with (with a few nice lunches in between).
One minute with Giles Hambly, Head of Tax Insurance at Gallagher.
What’s keeping you busy at work?
Having just recovered from the usual end of year rush to get policies in place tied to transactions closing (most sellers want to avoid providing an indemnity), I have an exciting variety of risks on my desk, including risks from sub-Saharan Africa, Germany, Turkey, the Middle East and the UK.
If you could make one change to a tax law or practice, what would it be?
Advance tax payments – a number of jurisdictions apply something akin to a ‘pay to play’ rule, such that where a position is challenged and then assessed by a tax authority, the taxpayer is required to put up a percentage of the tax assessed to be able to defend the challenge. In limited scenarios this may be warranted, however it may have the unfortunate consequence of encouraging tax authorities to be more aggressive. There are certain jurisdictions where, allegedly, tax inspectors’ ‘KPIs’ are based on how much revenue they bring in (including through advance tax payments); this may arguably incentivise aggressive tax authority behaviour.
What do you know now that you wish you’d known at the start of your career?
Three things. First, it’s important to build a strong grounding in the principles of tax. Second, relationships are critical to an adviser’s success. And third, stay focused on your own career, not the careers of your peers. Everyone’s journey in this profession is different and often runs at different speeds – that is OK.
Are there any new rules that are causing a particular problem?
The Pillar Two rules and how they will impact transactions which are being insured. There’s concern from clients that warranty & indemnity insurance will seek to exclude these risks as a standard starting position. This concern is valid. Until the application of the rules becomes clearer and, to some degree, tested, clients will need to seek bespoke tax insurance solutions to get comfort. Thankfully, the tax insurance market is competitive enough to design bespoke insurance solutions for these risks.
Has a recent tax case caught your eye?
The BlueCrest decision in the Upper Tribunal (HMRC v Bluecrest Capital Management (UK) LLP [2023] UKUT 232 (TCC)) is of significant interest. The insurance market (and their advisers) did not expect a decision in favour of the taxpayer. It will be very interesting to see how this plays out in the Court of Appeal as it is likely to have a significant impact on how alternative investment funds are run. It’s a classic case of ‘one size does not fit all’ when applying tax legislation.
Tell us something about tax insurance we don’t already know.
Tax insurance is not limited to risks arising in an M&A context. Tax insurance can cover: operational tax risks (both historic and forward-looking), transfer pricing, risks under audit, risks in active litigation, risks associated with restructures, and risks associated with administration proceedings. There are very few limitations to how tax insurance can be applied to provide bespoke solutions for a variety of risks. It usually requires a broker to work with an insurer to think laterally or creatively about how to design a solution that works.
Finally, you might not know this about me but…
I moved to London from Sydney 10 years ago, and shortly after I met my Ecuadorean wife at a flatshare and got married within six months. I now have the pleasure of spending Christmases in the warmth of Ecuador and I have a son whom I’m pretty sure understands more Spanish than English, or at least he’s happy to give me a blank face when I’m asking him to do something. I enjoy spending time in Quito with an incredibly large and warm family (my father-in-law is one of 12). It also gives me the opportunity to spread the word on tax insurance and push the application of the product in jurisdictions the market is less familiar with (with a few nice lunches in between).
