One minute with King & Wood Mallesons' co-head of tax for Europe and the Middle East, Heather Corben.
You are head of the London tax department and co-head of tax for Europe and the Middle East at King & Wood Mallesons. What makes the firm unique?
The UK firm (originally SJ Berwin) was established in 1982 by partners with a strong tax background and consequently the tax department has always played an important role here.
With 11 offices in China alone, the firm has a really strong and unique knowledge of how to invest inbound into China and other parts of Asia and outbound into Europe and Australia.
What is the number one practical issue on tax for your clients?
The complexity of the tax legislation which can make it difficult for clients to be able to understand quickly the tax consequences of the transactions that they plan to undertake. The tax position of non-UK residents who want to acquire residential property here is now immensely complicated. The complexity obviously has some advantages for tax lawyers as it keeps us busy but a simpler system would be better for the economy.
What proposals are causing you particular concern at present?
HMRC is seeking to widen the description of financial product arrangements (hallmarks) which have to be notified to HMRC under the DOTAS regime. The draft regulations are very widely drafted and potentially catch plain vanilla tax advice. As drafted, a large number of disclosures may need to be made by advisors, without this being useful for HMRC.
We are also involved in making representations to HMRC about the new carry tax rules announced in the Summer Budget. The draft law is effective for amounts arising from 8 July 2015, but a number of areas of uncertainty (for example, how the legislation applies to internationally mobile executives) still need to be resolved.
How does BEPS affect your clients?
They are considering, and seeking advice from us on, whether and how the diverted profits tax, a forerunner of what may eventually emerge from the BEPS project, applies to them. We are finding that clients are considering centralising their operations in a more limited number of jurisdictions so as to ensure that they can demonstrate substance there. Of particular concern to our clients are the recommendations from the OECD, announced on 5 October, on interest deductibility. The OECD recommends a fixed ratio rule limiting net deductions to a percentage of EBITDA, with a 30% ceiling. This would be a significant change to UK law and is likely to affect the real estate and private equity sectors particularly hard.
If you could make one change to UK tax law, what would it be?
It would be to ‘start again’ with SDLT. Since its introduction in 2003, a large volume of anti-avoidance legislation has been added and, particularly in relation to the partnership provisions, one really needs to understand how the provisions have developed over time to make sense of them now. Ideally legislation should be clear so that taxpayers can confidently understand the liabilities which will arise in relation to transactions they want to undertake.
Name a memorable moment in your career.
A negative memorable moment was working late on a transaction in an office close to the Baltic Exchange on the evening when an IRA bomb exploded there. A more positive memorable moment was a recent evening sharing drinks with colleagues on a terrace of the Peace Hotel in Shanghai.
One minute with King & Wood Mallesons' co-head of tax for Europe and the Middle East, Heather Corben.
You are head of the London tax department and co-head of tax for Europe and the Middle East at King & Wood Mallesons. What makes the firm unique?
The UK firm (originally SJ Berwin) was established in 1982 by partners with a strong tax background and consequently the tax department has always played an important role here.
With 11 offices in China alone, the firm has a really strong and unique knowledge of how to invest inbound into China and other parts of Asia and outbound into Europe and Australia.
What is the number one practical issue on tax for your clients?
The complexity of the tax legislation which can make it difficult for clients to be able to understand quickly the tax consequences of the transactions that they plan to undertake. The tax position of non-UK residents who want to acquire residential property here is now immensely complicated. The complexity obviously has some advantages for tax lawyers as it keeps us busy but a simpler system would be better for the economy.
What proposals are causing you particular concern at present?
HMRC is seeking to widen the description of financial product arrangements (hallmarks) which have to be notified to HMRC under the DOTAS regime. The draft regulations are very widely drafted and potentially catch plain vanilla tax advice. As drafted, a large number of disclosures may need to be made by advisors, without this being useful for HMRC.
We are also involved in making representations to HMRC about the new carry tax rules announced in the Summer Budget. The draft law is effective for amounts arising from 8 July 2015, but a number of areas of uncertainty (for example, how the legislation applies to internationally mobile executives) still need to be resolved.
How does BEPS affect your clients?
They are considering, and seeking advice from us on, whether and how the diverted profits tax, a forerunner of what may eventually emerge from the BEPS project, applies to them. We are finding that clients are considering centralising their operations in a more limited number of jurisdictions so as to ensure that they can demonstrate substance there. Of particular concern to our clients are the recommendations from the OECD, announced on 5 October, on interest deductibility. The OECD recommends a fixed ratio rule limiting net deductions to a percentage of EBITDA, with a 30% ceiling. This would be a significant change to UK law and is likely to affect the real estate and private equity sectors particularly hard.
If you could make one change to UK tax law, what would it be?
It would be to ‘start again’ with SDLT. Since its introduction in 2003, a large volume of anti-avoidance legislation has been added and, particularly in relation to the partnership provisions, one really needs to understand how the provisions have developed over time to make sense of them now. Ideally legislation should be clear so that taxpayers can confidently understand the liabilities which will arise in relation to transactions they want to undertake.
Name a memorable moment in your career.
A negative memorable moment was working late on a transaction in an office close to the Baltic Exchange on the evening when an IRA bomb exploded there. A more positive memorable moment was a recent evening sharing drinks with colleagues on a terrace of the Peace Hotel in Shanghai.
