One minute with Michael Thompson, head of tax at Vinson & Elkins.
What sets Vinson & Elkins apart from other law firms?
Although the firm has a wide variety of clients and practices, it has a pre-eminent reputation as an adviser in the energy sector. Many lawyers here have a real passion for, and understanding of, the oil and gas industry in particular. The firm’s Texan roots provide an attractive mix of entrepreneurism and friendliness.
Why did you join them?
Although my practice, like that of any other City-based lawyer, had included a large component of work for clients in the financial sector, I also had the luck to work from the start of my career for several companies operating in the North Sea. Joining V&E provided not only the challenge of setting up something new, but also the comfort of having an excellent platform for my specialised oil and gas tax practice.
What’s of particular concern to your clients at present?
The current low oil price, combined with the natural difficulties of operating in the North Sea environment, means that the viability of many projects and even of some companies in the UK oil and gas sector is quite precarious and there are huge policy issues currently being debated with government. Removing some tax barriers from sales of infrastructure and late-life fields, so as to facilitate the transfer of assets into the hands of companies willing and able to exploit them to the full, is key.
What’s in your in-tray?
These difficult times for the oil industry mean that a lot of consolidation in the sector is needed. So a number of clients are currently seeking advice on structuring and negotiating sales or acquisitions. I am also advising several companies in their appeal process towards litigating against HMRC on a common issue. This seems at first sight to be an esoteric oil tax point, but actually revolves around the meaning of the terms ‘just’ and ‘reasonable’. So it will be interesting if we get to court.
If you could make one change relating to UK tax law, what would it be?
How about transferring responsibility for structuring the tax system out of the hands of short-term thinking politicians, leaving them only with discretion over rates of tax and allowances on a year to year basis? It sounds a bit undemocratic, but, instead of indulging in gesture politics by binding themselves not to increase the rate of income tax for a parliament, they could instead bind themselves to implement the conclusions of a non-partisan Tax Commission, set up for the long term to achieve a modern streamlined tax system!
Looking back on your career to date, what key lessons have you learned?
Although there is a time and place for a 50 page tax opinion (the introduction of the diverted profits tax has breathed fresh life into that beast), most clients need their adviser to help them ‘see the wood for the trees’ and give them concise advice which provides a clear steer on what decision to make. As we increase our understanding of the businesses of clients, we can be increasingly useful to them in helping them balance the tax issues in the context of all the other commercial issues they have to grapple with.
Tell us a secret.
Having suffered a work/life balance crisis some ten years ago, I have been fortunate to be able to work reasonably consistently for three days per week for several years, giving me time for other interests and renewed energy for my client work. This is thanks in large part to the support of my partner Jenny Doak who handles a lot of the urgent transaction work. It is also thanks to some very understanding clients, who will normally agree to wait a few days for advice, and to good IT back-up which helps me communicate from more pleasant locations than my office. Oh and another thing – I once trained as a pilot in the RAF and had the exhilaration of flying a fighter, an English Electric Lightning Mark II, at supersonic speeds along the East German border (before the Wall came down).
One minute with Michael Thompson, head of tax at Vinson & Elkins.
What sets Vinson & Elkins apart from other law firms?
Although the firm has a wide variety of clients and practices, it has a pre-eminent reputation as an adviser in the energy sector. Many lawyers here have a real passion for, and understanding of, the oil and gas industry in particular. The firm’s Texan roots provide an attractive mix of entrepreneurism and friendliness.
Why did you join them?
Although my practice, like that of any other City-based lawyer, had included a large component of work for clients in the financial sector, I also had the luck to work from the start of my career for several companies operating in the North Sea. Joining V&E provided not only the challenge of setting up something new, but also the comfort of having an excellent platform for my specialised oil and gas tax practice.
What’s of particular concern to your clients at present?
The current low oil price, combined with the natural difficulties of operating in the North Sea environment, means that the viability of many projects and even of some companies in the UK oil and gas sector is quite precarious and there are huge policy issues currently being debated with government. Removing some tax barriers from sales of infrastructure and late-life fields, so as to facilitate the transfer of assets into the hands of companies willing and able to exploit them to the full, is key.
What’s in your in-tray?
These difficult times for the oil industry mean that a lot of consolidation in the sector is needed. So a number of clients are currently seeking advice on structuring and negotiating sales or acquisitions. I am also advising several companies in their appeal process towards litigating against HMRC on a common issue. This seems at first sight to be an esoteric oil tax point, but actually revolves around the meaning of the terms ‘just’ and ‘reasonable’. So it will be interesting if we get to court.
If you could make one change relating to UK tax law, what would it be?
How about transferring responsibility for structuring the tax system out of the hands of short-term thinking politicians, leaving them only with discretion over rates of tax and allowances on a year to year basis? It sounds a bit undemocratic, but, instead of indulging in gesture politics by binding themselves not to increase the rate of income tax for a parliament, they could instead bind themselves to implement the conclusions of a non-partisan Tax Commission, set up for the long term to achieve a modern streamlined tax system!
Looking back on your career to date, what key lessons have you learned?
Although there is a time and place for a 50 page tax opinion (the introduction of the diverted profits tax has breathed fresh life into that beast), most clients need their adviser to help them ‘see the wood for the trees’ and give them concise advice which provides a clear steer on what decision to make. As we increase our understanding of the businesses of clients, we can be increasingly useful to them in helping them balance the tax issues in the context of all the other commercial issues they have to grapple with.
Tell us a secret.
Having suffered a work/life balance crisis some ten years ago, I have been fortunate to be able to work reasonably consistently for three days per week for several years, giving me time for other interests and renewed energy for my client work. This is thanks in large part to the support of my partner Jenny Doak who handles a lot of the urgent transaction work. It is also thanks to some very understanding clients, who will normally agree to wait a few days for advice, and to good IT back-up which helps me communicate from more pleasant locations than my office. Oh and another thing – I once trained as a pilot in the RAF and had the exhilaration of flying a fighter, an English Electric Lightning Mark II, at supersonic speeds along the East German border (before the Wall came down).
