One minute with Karin Shanks, tax disputes expert at Jon Preshaw Tax.
What’s keeping you busy at work?
I recently joined Jon Preshaw Tax Ltd having left HMRC after 16 years. I deal with all aspects of tax disputes, so there is plenty to keep me busy. My former role at HMRC was in FIS Offshore, Corporate & Wealthy, so I am pleased to be able to advise clients on HMRC’s current processes and procedures to ensure that these difficult cases are managed as efficiently as possible.
If you could make one change to tax law or practice, what would it be?
The current tax geared penalty regime poses significant barriers to settling HMRC disputes. Extensive case law demonstrates the subjective nature of the application of the rules, and they have become increasingly complex as layers of additional penalties (such as offshore penalties and RTC penalties) have been added. This presents problems for both HMRC and advisers as disputes over penalties can sometimes take longer to resolve and be more contentious than technical tax disputes.
Additionally, although HMRC strives to apply legislation consistently, this does not always appear to happen in practice. For example, the ‘10% uplift’ – where HMRC restricts the maximum reduction of the quality of the disclosure to 10% if it has taken a significant period for the taxpayer to disclose to HMRC – can be problematic. This rule is not new, but it has not been applied consistently and it still seems to be an area of contention in some cases.
HMRC should be challenged on unfair applications of penalty legislation; however taxpayers, advisers and HMRC would benefit from the legislation being revisited.
What do you know now that you wish you’d known at the start of your career?
Dealing with tax disputes is just as much about dealing with people as it is dealing with technical disputes. The decisions people make about tax and about settling tax disputes don’t take place in a vacuum. It is not always the obvious commercial issues which drive behaviour.
Has a recent case caught your eye?
The recent case of Ravicher [2022] UKFTT 454 (TC) involved an appeal against HMRC’s refusal to postpone the payment of tax due on discovery assessments. I think this is an example of something we are likely to see more of in future, with HMRC’s approach to postponement getting more robust over time. Until recently, it would have been unusual for HMRC to reject postponement applications; however, given the long delays for appeals to be resolved and pressures around the public finances more generally, this is an area HMRC is likely to focus on. I would certainly recommend that postponement applications are given more attention than perhaps would have been the case in the past.
What should we look out for in 2023?
In the early part of 2023, I expect clients to receive assessments and determinations where HMRC believes they are impacted by the disguised remuneration loan charge. The normal four-year assessing time limit for the charge will expire on 5 April 2023, and HMRC has apparently committed to dealing with these cases before the end of March 2024. These assessments and determinations are likely to give rise to complicated tax and commercial issues, and I expect us to be dealing with the fallout well into the year.
There has been an increase in information sharing between tax authorities following the UK’s participation with the Joint Chiefs of Global Tax Enforcement (J5), which also includes Australia, US, Netherlands and Canada. I expect to see this leading to more concrete action next year.
More generally, throughout 2023, I expect HMRC’s heavy reliance on ‘nudge’ letters to continue.
You might not know this about me but...
I keep backyard chickens. I am proud owner of three hens, named Betty, Linda and Rosie. They produce fabulous eggs, so since their arrival I have become an expert at poached eggs and meringues.
One minute with Karin Shanks, tax disputes expert at Jon Preshaw Tax.
What’s keeping you busy at work?
I recently joined Jon Preshaw Tax Ltd having left HMRC after 16 years. I deal with all aspects of tax disputes, so there is plenty to keep me busy. My former role at HMRC was in FIS Offshore, Corporate & Wealthy, so I am pleased to be able to advise clients on HMRC’s current processes and procedures to ensure that these difficult cases are managed as efficiently as possible.
If you could make one change to tax law or practice, what would it be?
The current tax geared penalty regime poses significant barriers to settling HMRC disputes. Extensive case law demonstrates the subjective nature of the application of the rules, and they have become increasingly complex as layers of additional penalties (such as offshore penalties and RTC penalties) have been added. This presents problems for both HMRC and advisers as disputes over penalties can sometimes take longer to resolve and be more contentious than technical tax disputes.
Additionally, although HMRC strives to apply legislation consistently, this does not always appear to happen in practice. For example, the ‘10% uplift’ – where HMRC restricts the maximum reduction of the quality of the disclosure to 10% if it has taken a significant period for the taxpayer to disclose to HMRC – can be problematic. This rule is not new, but it has not been applied consistently and it still seems to be an area of contention in some cases.
HMRC should be challenged on unfair applications of penalty legislation; however taxpayers, advisers and HMRC would benefit from the legislation being revisited.
What do you know now that you wish you’d known at the start of your career?
Dealing with tax disputes is just as much about dealing with people as it is dealing with technical disputes. The decisions people make about tax and about settling tax disputes don’t take place in a vacuum. It is not always the obvious commercial issues which drive behaviour.
Has a recent case caught your eye?
The recent case of Ravicher [2022] UKFTT 454 (TC) involved an appeal against HMRC’s refusal to postpone the payment of tax due on discovery assessments. I think this is an example of something we are likely to see more of in future, with HMRC’s approach to postponement getting more robust over time. Until recently, it would have been unusual for HMRC to reject postponement applications; however, given the long delays for appeals to be resolved and pressures around the public finances more generally, this is an area HMRC is likely to focus on. I would certainly recommend that postponement applications are given more attention than perhaps would have been the case in the past.
What should we look out for in 2023?
In the early part of 2023, I expect clients to receive assessments and determinations where HMRC believes they are impacted by the disguised remuneration loan charge. The normal four-year assessing time limit for the charge will expire on 5 April 2023, and HMRC has apparently committed to dealing with these cases before the end of March 2024. These assessments and determinations are likely to give rise to complicated tax and commercial issues, and I expect us to be dealing with the fallout well into the year.
There has been an increase in information sharing between tax authorities following the UK’s participation with the Joint Chiefs of Global Tax Enforcement (J5), which also includes Australia, US, Netherlands and Canada. I expect to see this leading to more concrete action next year.
More generally, throughout 2023, I expect HMRC’s heavy reliance on ‘nudge’ letters to continue.
You might not know this about me but...
I keep backyard chickens. I am proud owner of three hens, named Betty, Linda and Rosie. They produce fabulous eggs, so since their arrival I have become an expert at poached eggs and meringues.
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