One minute with Hugh Gunson, solicitor-advocate at Charles Russell Speechlys
What’s keeping you busy at work?
A real mix at the moment. My practice focuses on contentious tax work, so I’m currently looking at a range of HMRC enquiries and investigations, as well as appeals before the tribunal, for a mixture of individuals, trustees and corporate clients. Current hot topics include domicile, the loan charge and other disguised remuneration arrangements, as well as IR35 (both in the context of historic disputes and advising on the upcoming changes). I’m also seeing a whole raft of claims for mistake and rectification in the context of unexpected historic tax liabilities, both in the UK and offshore jurisdictions. And there’s a steady stream of tax-related professional negligence cases – not defending my own thankfully but helping out clients who have received bad tax advice.
Are there any new rules that are causing a particular problem?
I know this is something of a familiar complaint, but the DAC 6 rules (the new EU rules requiring disclosure to tax authorities of cross-border arrangements containing indicators of tax avoidance) are currently a real headache. Given reporting starts this coming August and covers transactions going back to June 2018, one might hope that by now we would have some real clarity on the reporting obligations and their scope, particularly around critical points like legal professional privilege. The government has just published a response to the consultation, but this hasn’t advanced the position a great deal. While there are some helpful indicators that the government will listen to stakeholder representations on various key points, it is clear that a lot of reliance will need to be placed on HMRC guidance – but that is still to come.
Is there a recent tax case that has caught your eye?
Can I pick two? I’ve been particularly interested by the recent debate in the First-tier Tribunal between the decisions in Embiricos [2019] UKFTT 236 (TC)and Executors of Mrs R W Levy [2019] UKFTT 418 (TC). Each case concerns the scope of the recently-introduced partial closure notice regime in the context of a domicile enquiry. The issue was whether HMRC can issue a partial closure notice covering a taxpayer’s domicile status only; or whether such a notice must also quantify the level of foreign income and gains that would be taxable were the taxpayer UK domiciled (and so relatedly, whether that information must be provided to HMRC). The two different FTTs came to entirely opposite conclusions within a matter of months last year. I understand the Embiricos case is proceeding on appeal, so it will be interesting to see how this develops, both for the application to domicile enquiries and as to the scope of the partial closure notice regime more generally. In the meantime, it’s fair to say that the law is currently in a state of limbo – which presents some interesting strategic questions for ongoing domicile enquiries!
What should we look out for in 2020?
The loan charge is something I’ve been following with interest, as I have a number of affected clients. The government’s response to the recent review has signaled some fundamental changes, but it remains to be seen whether this will be the end of the matter. One thing that caught my eye in the review as potentially of wider application was the recommendation for greater HMRC accountability. HMRC has significant powers (which have increased greatly in recent years), and there is a definite sense that it sometimes overreaches. It will be interesting to see whether anything concrete comes out of this, and if it leads to any change to the future conduct of enquiries.
Please share a tip in your practice area.
I know it’s not the most glamorous topic, but don’t forget the importance of procedure! Or to put it another way, always check whether HMRC have the power to do what they are trying to do. HMRC does have wide-ranging powers, but these have limits (in some cases, tightly-circumscribed) and it’s critical to be aware of them. So, for example, when HMRC issues an assessment, ask if it been issued on time and whether all the relevant conditions are met. If HMRC is asking for information, is it properly entitled to it? There is often an understandable temptation to skip straight to the substantive meat of a dispute, and it still amazes me how often procedural failings or defects by HMRC are overlooked.
And finally, you might not know this about me but…
I did once appear (unsuccessfully) with a group of friends on the BBC2 daytime quiz show, Eggheads. We will forever be haunted by our lack of knowledge of the colour ecru.
One minute with Hugh Gunson, solicitor-advocate at Charles Russell Speechlys
What’s keeping you busy at work?
A real mix at the moment. My practice focuses on contentious tax work, so I’m currently looking at a range of HMRC enquiries and investigations, as well as appeals before the tribunal, for a mixture of individuals, trustees and corporate clients. Current hot topics include domicile, the loan charge and other disguised remuneration arrangements, as well as IR35 (both in the context of historic disputes and advising on the upcoming changes). I’m also seeing a whole raft of claims for mistake and rectification in the context of unexpected historic tax liabilities, both in the UK and offshore jurisdictions. And there’s a steady stream of tax-related professional negligence cases – not defending my own thankfully but helping out clients who have received bad tax advice.
Are there any new rules that are causing a particular problem?
I know this is something of a familiar complaint, but the DAC 6 rules (the new EU rules requiring disclosure to tax authorities of cross-border arrangements containing indicators of tax avoidance) are currently a real headache. Given reporting starts this coming August and covers transactions going back to June 2018, one might hope that by now we would have some real clarity on the reporting obligations and their scope, particularly around critical points like legal professional privilege. The government has just published a response to the consultation, but this hasn’t advanced the position a great deal. While there are some helpful indicators that the government will listen to stakeholder representations on various key points, it is clear that a lot of reliance will need to be placed on HMRC guidance – but that is still to come.
Is there a recent tax case that has caught your eye?
Can I pick two? I’ve been particularly interested by the recent debate in the First-tier Tribunal between the decisions in Embiricos [2019] UKFTT 236 (TC)and Executors of Mrs R W Levy [2019] UKFTT 418 (TC). Each case concerns the scope of the recently-introduced partial closure notice regime in the context of a domicile enquiry. The issue was whether HMRC can issue a partial closure notice covering a taxpayer’s domicile status only; or whether such a notice must also quantify the level of foreign income and gains that would be taxable were the taxpayer UK domiciled (and so relatedly, whether that information must be provided to HMRC). The two different FTTs came to entirely opposite conclusions within a matter of months last year. I understand the Embiricos case is proceeding on appeal, so it will be interesting to see how this develops, both for the application to domicile enquiries and as to the scope of the partial closure notice regime more generally. In the meantime, it’s fair to say that the law is currently in a state of limbo – which presents some interesting strategic questions for ongoing domicile enquiries!
What should we look out for in 2020?
The loan charge is something I’ve been following with interest, as I have a number of affected clients. The government’s response to the recent review has signaled some fundamental changes, but it remains to be seen whether this will be the end of the matter. One thing that caught my eye in the review as potentially of wider application was the recommendation for greater HMRC accountability. HMRC has significant powers (which have increased greatly in recent years), and there is a definite sense that it sometimes overreaches. It will be interesting to see whether anything concrete comes out of this, and if it leads to any change to the future conduct of enquiries.
Please share a tip in your practice area.
I know it’s not the most glamorous topic, but don’t forget the importance of procedure! Or to put it another way, always check whether HMRC have the power to do what they are trying to do. HMRC does have wide-ranging powers, but these have limits (in some cases, tightly-circumscribed) and it’s critical to be aware of them. So, for example, when HMRC issues an assessment, ask if it been issued on time and whether all the relevant conditions are met. If HMRC is asking for information, is it properly entitled to it? There is often an understandable temptation to skip straight to the substantive meat of a dispute, and it still amazes me how often procedural failings or defects by HMRC are overlooked.
And finally, you might not know this about me but…
I did once appear (unsuccessfully) with a group of friends on the BBC2 daytime quiz show, Eggheads. We will forever be haunted by our lack of knowledge of the colour ecru.
