One minute with Mark Bevington, founder and principal tax adviser of ADE Tax Ltd.
What’s keeping you busy at work?
In short, transfer pricing and disputes (often together) and policy. HMRC appears to be taking some positions that are both hopeful and deeply entrenched, perhaps because it doesn’t always invest the time to properly understand the large volume of information it is now in the habit of requesting. Judging by our portfolio, there could be some ground-breaking cases decided in the next few years, especially on transfer pricing/diverted profits tax matters where parties have historically shied away from litigation and also cases relating to the extent to which complex legislation is ‘stretched’ to cover situations which might be seen as falling between the cracks of different provisions.
I also support clients in their interactions with the OECD; it is of paramount importance to make sure their multilateral proposals to reform the way profits are allocated are made to work. International tax only works with multilateral rules, but I worry that the OECD has a long way to go to understand the full implications of changing the tax system in response to the digitalisation of the economy.
If you could make one change to a tax law or practice, what would it be?
It was heartening to see a change in the recent Budget which we and others had worked hard to secure: namely, the removal of anomalies on when a business relocating to the UK could claim a deduction for goodwill amortisation.
But if I could make a further change, it would be to resolve more disputes through ‘baseball arbitration’ where the arbitrator or court has to choose one side’s position in its entirety. This would help concentrate minds on all sides. The biggest risk for many taxpayers is double taxation, and a better arbitration process is central to managing that.
Are there any new rules that are causing a particular problem?
I believe that few have thought through the true implications of moving to destination-based corporate income tax, as seen in unilateral digital taxes and the OECD’s unified approach. There is a danger that these could create perverse incentives that might harm trade and growth overall, most particularly a ‘race to the top’ in corporate income tax. Whether or not you approved of the tax competition seen in the last 15 years, this trend could significantly harm global growth.
Has a recent tax case caught your eye?
The Supreme Court decision in Fowler [2020] UKSC 22 is a well written and thought provoking judgment. It reminds me a little of Jerome v Kelly [2004] 2 All ER 835, in that, post reading, it makes you wonder why the issue seemed so complex. Fowler might be ostensibly about taxing rights of divers under a treaty but the way the court approached a difficult question is useful for any tax adviser of any specialism to study. It is also a salient reminder of the difficulty advisers face when there is a binary answer and both outcomes are sensibly arguable.
What should we look out for later this year?
The coronavirus pandemic has amplified a trend we were already seeing where countries are prepared to take positions which serve their short-term interests, even if they do collective harm in the long term. In tax, we are at a crossroads where we risk abandoning the existing international rule base without having consensus on its replacement. This should be of concern to boards of multinationals, not just their tax departments.
And finally, you might not know this about me but...
I am one of the 0.4% of the population who has an identical twin. My brother left a finance career after six months to become a teacher and is now head of a school in Norwich. Even living in different cities, people occasionally tell me off for ignoring them not realising they had encountered my brother.
One minute with Mark Bevington, founder and principal tax adviser of ADE Tax Ltd.
What’s keeping you busy at work?
In short, transfer pricing and disputes (often together) and policy. HMRC appears to be taking some positions that are both hopeful and deeply entrenched, perhaps because it doesn’t always invest the time to properly understand the large volume of information it is now in the habit of requesting. Judging by our portfolio, there could be some ground-breaking cases decided in the next few years, especially on transfer pricing/diverted profits tax matters where parties have historically shied away from litigation and also cases relating to the extent to which complex legislation is ‘stretched’ to cover situations which might be seen as falling between the cracks of different provisions.
I also support clients in their interactions with the OECD; it is of paramount importance to make sure their multilateral proposals to reform the way profits are allocated are made to work. International tax only works with multilateral rules, but I worry that the OECD has a long way to go to understand the full implications of changing the tax system in response to the digitalisation of the economy.
If you could make one change to a tax law or practice, what would it be?
It was heartening to see a change in the recent Budget which we and others had worked hard to secure: namely, the removal of anomalies on when a business relocating to the UK could claim a deduction for goodwill amortisation.
But if I could make a further change, it would be to resolve more disputes through ‘baseball arbitration’ where the arbitrator or court has to choose one side’s position in its entirety. This would help concentrate minds on all sides. The biggest risk for many taxpayers is double taxation, and a better arbitration process is central to managing that.
Are there any new rules that are causing a particular problem?
I believe that few have thought through the true implications of moving to destination-based corporate income tax, as seen in unilateral digital taxes and the OECD’s unified approach. There is a danger that these could create perverse incentives that might harm trade and growth overall, most particularly a ‘race to the top’ in corporate income tax. Whether or not you approved of the tax competition seen in the last 15 years, this trend could significantly harm global growth.
Has a recent tax case caught your eye?
The Supreme Court decision in Fowler [2020] UKSC 22 is a well written and thought provoking judgment. It reminds me a little of Jerome v Kelly [2004] 2 All ER 835, in that, post reading, it makes you wonder why the issue seemed so complex. Fowler might be ostensibly about taxing rights of divers under a treaty but the way the court approached a difficult question is useful for any tax adviser of any specialism to study. It is also a salient reminder of the difficulty advisers face when there is a binary answer and both outcomes are sensibly arguable.
What should we look out for later this year?
The coronavirus pandemic has amplified a trend we were already seeing where countries are prepared to take positions which serve their short-term interests, even if they do collective harm in the long term. In tax, we are at a crossroads where we risk abandoning the existing international rule base without having consensus on its replacement. This should be of concern to boards of multinationals, not just their tax departments.
And finally, you might not know this about me but...
I am one of the 0.4% of the population who has an identical twin. My brother left a finance career after six months to become a teacher and is now head of a school in Norwich. Even living in different cities, people occasionally tell me off for ignoring them not realising they had encountered my brother.
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