One minute with Simon Wilks, independent tax and business adviser
What’s keeping you busy at work?
Since retiring from PwC, I have done some consultancy with companies wanting to resolve some rather intractable issues with HMRC. I must confess, however, that I am currently somewhat busier with my Open University history degree.
Can you provide a practical tip on your area of expertise?
Always check thoroughly that the relevant procedural requirements have been followed. I have frequently found instances where enquiries had not been opened properly or assessments not made correctly (and in one case a closure notice sent prematurely). The recent Credit Suisse case [2020] UKFTT 86 (TC), where the taxpayer won at the FTT because HMRC failed to give notice of intention to enquire, shows that this remains good advice.
While it might be seen as unfair ‘to win on technicalities’, it does, of course, work both ways. It is good for the integrity of the system that everyone plays by the rules – and it’s worth remembering that since the case of Wilkinson [2005] UKHL 30, HMRC has considered that its discretion is highly constrained and it generally imposes a strict interpretation of administrative provisions.
Have any recent tax changes caught your eye?
The Budget proposal on notification of uncertain tax treatment stood out for me. This is a requirement for large businesses to notify HMRC where they take a tax treatment relying on an uncertain legal interpretation which HMRC is likely to challenge. The measure is due to come in in April 2021 and it is now open for consultation. While the accounting standard IFRIC 23 already requires entities to consider the probable attitude of a tax authority to a particular tax treatment in drawing up its accounts, there is all the difference in the world between a provision aimed at getting the accounts right and one where, on pain of penalty, one has to notify the tax authority. I support the desire for openness between large business and HMRC officers, but in my experience that already operates successfully with the business risk review system. I don’t think that adding a penal requirement like this is the way to achieve it. It will almost certainly cause difficulty for a number of businesses which, depending on the sanctions for failing to notify, may end up incurring disproportionate professional fees attempting to second guess HMRC’s likely challenges. It is also likely that some businesses will over-disclose to HMRC, especially where it is not clear from HMRC’s guidance or publications what its view is. This is likely to cause problems for HMRC because it is not ideally set up to ‘clear’ a wide variety of transactions. The new requirement is costed as bringing in an additional £45m by 2023/24 as a result of behavioural changes, but it seems to me that those changes have mostly already taken place. This measure will simply add an additional layer of compliance burden for no tangible reason.
What do you know now that you wish you’d known at the start of your career?
There are so many things. As a tax inspector, I underestimated the need to understand the commercial drivers of the taxpayers I dealt with, and consequently assumed that tax was at the heart of most transactions. That changed very quickly as an adviser: it was quite a shock to see that tax was an afterthought for so many clients!
That aside, if I was to go back and advise my young self, I would probably say two things: enjoy every day (if you can); and remember that just as your firm’s every interaction with its clients affects its brand, so each individual’s interaction with colleagues and clients determines the individual’s reputation as an adviser.
You might not know this about me...
Before I became a tax practitioner, I led a riot squad in the Royal Hong Kong Police. I can’t say that any tax meetings I had degenerated into riot (or even unlawful assembly), so maybe that experience wasn’t of direct application. But I always felt that it gave me the confidence to deal with difficult situations.
One minute with Simon Wilks, independent tax and business adviser
What’s keeping you busy at work?
Since retiring from PwC, I have done some consultancy with companies wanting to resolve some rather intractable issues with HMRC. I must confess, however, that I am currently somewhat busier with my Open University history degree.
Can you provide a practical tip on your area of expertise?
Always check thoroughly that the relevant procedural requirements have been followed. I have frequently found instances where enquiries had not been opened properly or assessments not made correctly (and in one case a closure notice sent prematurely). The recent Credit Suisse case [2020] UKFTT 86 (TC), where the taxpayer won at the FTT because HMRC failed to give notice of intention to enquire, shows that this remains good advice.
While it might be seen as unfair ‘to win on technicalities’, it does, of course, work both ways. It is good for the integrity of the system that everyone plays by the rules – and it’s worth remembering that since the case of Wilkinson [2005] UKHL 30, HMRC has considered that its discretion is highly constrained and it generally imposes a strict interpretation of administrative provisions.
Have any recent tax changes caught your eye?
The Budget proposal on notification of uncertain tax treatment stood out for me. This is a requirement for large businesses to notify HMRC where they take a tax treatment relying on an uncertain legal interpretation which HMRC is likely to challenge. The measure is due to come in in April 2021 and it is now open for consultation. While the accounting standard IFRIC 23 already requires entities to consider the probable attitude of a tax authority to a particular tax treatment in drawing up its accounts, there is all the difference in the world between a provision aimed at getting the accounts right and one where, on pain of penalty, one has to notify the tax authority. I support the desire for openness between large business and HMRC officers, but in my experience that already operates successfully with the business risk review system. I don’t think that adding a penal requirement like this is the way to achieve it. It will almost certainly cause difficulty for a number of businesses which, depending on the sanctions for failing to notify, may end up incurring disproportionate professional fees attempting to second guess HMRC’s likely challenges. It is also likely that some businesses will over-disclose to HMRC, especially where it is not clear from HMRC’s guidance or publications what its view is. This is likely to cause problems for HMRC because it is not ideally set up to ‘clear’ a wide variety of transactions. The new requirement is costed as bringing in an additional £45m by 2023/24 as a result of behavioural changes, but it seems to me that those changes have mostly already taken place. This measure will simply add an additional layer of compliance burden for no tangible reason.
What do you know now that you wish you’d known at the start of your career?
There are so many things. As a tax inspector, I underestimated the need to understand the commercial drivers of the taxpayers I dealt with, and consequently assumed that tax was at the heart of most transactions. That changed very quickly as an adviser: it was quite a shock to see that tax was an afterthought for so many clients!
That aside, if I was to go back and advise my young self, I would probably say two things: enjoy every day (if you can); and remember that just as your firm’s every interaction with its clients affects its brand, so each individual’s interaction with colleagues and clients determines the individual’s reputation as an adviser.
You might not know this about me...
Before I became a tax practitioner, I led a riot squad in the Royal Hong Kong Police. I can’t say that any tax meetings I had degenerated into riot (or even unlawful assembly), so maybe that experience wasn’t of direct application. But I always felt that it gave me the confidence to deal with difficult situations.
