A selection of highlights from this year’s ‘one minute with’ coverage.
What do you know now that you wish you’d known at the start of your career?
Apart from all the Grand National winners from 1997 to 2019, I wish that I had realised that the more interesting work generally comes from family (entrepreneurial businesses) as opposed to large corporate groups. Starting in a large mergers and acquisitions group in London, I remember hearing the Entrepreneurs’ Tax Group rather snobbishly being referred to as ‘the chip shop group’ by advisers who felt that ‘bigger is better’. I feel slightly sorry for those tax professionals who have let these kinds of prejudices restrict their careers. The dynamics of a family business has a lot more colour and interesting psychology than is the case with a large listed company. Andrew Marr, partner at Forbes Dawson (4 November)
Tips for success?
Have confidence in your own judgement. If something does not look right to you, it is probably not (and it would be good to air the issue any way). Do not be afraid to speak up, even if you are junior. As a partner, I really value all my team members forming their own views on particular scenarios. Jeremy Edwards, partner at Baker & McKenzie (14 October)
It may seem obvious but having a solid network of in-house tax peers is invaluable; it can be quite lonely and daunting being the only tax person in a business. In the North West, there are a few in-house tax forums that run throughout the year which give us the opportunity to share practical experience and best practices. Kate Rothwell, head of tax at AO Group (28 October)
I encourage my team to think of themselves as business people with expert tax knowledge, rather than solely tax advisers. If you work at an investment firm, then you should see yourself primarily as an investor, with the goal of building the best possible tax structures that will optimise the firm’s investing activity. Rather than staying put in the tax office, the tax team should be actively involved in strategic, structuring and investing discussions with various parts of the business. Shivani Lala, tax partner at SoftBank Investment Advisors
New rules causing a real problem?
DAC 6 (the new European rules imposing a requirement to disclose certain types of cross border transactions) is currently an area of focus for many tax practitioners. The challenging circumstances of these very broad rules being in force and applying to transactions for months before the UK has any settled rules should be of concern to everyone. Clients should consult their advisers early on the potential effects of these rules and how to manage any resultant disclosures. Jessica Kemp, partner at Travers Smith (25 October)
They may not qualify as ‘new’ any more (three years seems like a long time in tax), but I continue to find the FA 2016 anti-hybrid mismatches rules a particular bugbear. If you take the UK’s characteristic penchant for excessively elaborated statutory drafting, use it to write a regime targeting tax mismatches in a wide and varied range of different scenarios, and then deliberately (and with OECD BEPS action plan endorsement) leave out any tax avoidance purpose filter, perhaps it is no great surprise that the results are highly unsatisfactory. But it comes to something when HMRC writes over 400 pages of guidance on nearly 50 pages of legislation (and meanwhile ATAD covers the ground in a single page of operative rules). Paul Davison, partner at Freshfields Bruckhaus Deringer (24 May)
The residence nil rate band continues to mystify clients and practitioners alike. When is it applicable? When does is get lost through taper relief? How do the downsizing rules work? It is unfair on clients who cannot benefit because they have no children and can therefore only utilise the normal nil rate bands. It was a shame this measure was not tackled by the Office of Tax Simplification in its recent paper, but I have no doubt that its days are numbered. James Ward, head of the private client team at Kingsley Napley (18 July)
A case that caught your eye?
The recent Hannover Leasing case ([2019] UKFTT 262 (TC)) on FA 2003 s 75A has caused real concern amongst SDLT practitioners as it demonstrates a willingness by HMRC to apply that section to a situation where there was no SDLT avoidance but rather a structure which enabled a saving of SDLT by being done in one way (a sale of units) instead of another (a sale of land). If correct, it leaves us having to give quite strong s 75A health warnings in many seemingly innocent cases. It has also created a high degree of uncertainty around HMRC's approach to the guidance in its manuals, which is of potentially wider application. Sara Maccallum, the senior partner and head of the commercial tax group at Boodle Hatfield (7 June)
How might the profession change?
I expect more regulation will be introduced, which I think the tax profession will have to pay for. We are already experiencing this with OPBAS (the Office for Professional Body Anti-money Laundering Supervisors), where all professional body AML supervisors are contributing to their cost. How we respond to this depends on the type of regulation that will be introduced: full regulation, partial regulation or no regulation at all. The ATT is already considering the various issues for each scenario. There are many unaffiliated agents; if HMRC were to go down the full regulation route, who would regulate these people? Would they be required to belong to a professional body which could be relied upon to enforce standards, or perhaps be regulated by HMRC or a third party such as the FCA? Jane Ashton, chief executive of the ATT
I fear we are going to see further radical change with the possible splitting up of the ‘big 4’ and the segregation of audit from consultancy services. I suspect the tax profession will look completely different in ten years’ time. Alastair Kendrick, employment tax specialist (12 July)
The biggest influence will be technology. Machine learning and artificial intelligence will continue to automate compliance processes. Blockchain computing provides opportunities for real time reporting of transactions to tax authorities, and real time payment of tax, especially taxes such as VAT. I can see large corporations’ ERP systems essentially being open to tax authorities, with some traditional audit activity replaced by automated data analysis. The profession will have to work out how it integrates the use of technology into the training of those working in tax. Glyn Fullelove, CIOT president (21 June)
Digital innovation is something that tax authorities are looking at with as much interest as the private sector. In some jurisdictions, e-audits are increasingly common; in others, data analytics tools are used to match, store and review large data sets. Some countries like the UK have committed to pre-populating tax returns as far as possible by using third party data streams. This trend is set to continue, and it will fundamentally change how taxpayers and authorities interact. Annis Lampard, head of Deloitte’s tax disclosure and transparency team (10 October)
If you could make one change to tax law…
We’ve all heard the moral debate about everyone paying their ‘fair share’, but there comes a point where a line in the sand needs to be drawn and a more pragmatic view taken. A general avoidance settlement opportunity (similar, for example, to the LDF) with some abated terms (particularly on interest and penalties which are simply insurmountable to most investors) would facilitate a more cohesive collection of tax from failed avoidance schemes. Sarah Stenton, tax director at Stewarts (21 August)
I would make it mandatory for all existing and new HMRC powers to contain appeal provisions (and increase the resources available to the Courts and Tribunals Service). Those of us who have been working in litigation for some time will have seen the steady erosion of access to justice through chronic underfunding of the justice system and a raft of new powers given to HMRC which contain little or no effective judicial oversight. This has placed considerable pressure on the Admin Division of the High Court, which deals with judicial reviews. More broadly, however, the effect of such powers – whilst attractive to HMRC and governments in the short term – leaves open considerable scope for abuse and overreach, the effect of which, in my view, is likely to diminish trust between the taxpayer and HMRC in the long term. Robert Waterson, partner at RPC (14 June)
If you’ll permit me three… (1) Fewer Finance Bills and each subject to greater Parliamentary scrutiny (including from the House of Lords). (2) Taxpayers to be entitled to make judicial review challenges in the First-tier Tribunal. There should be an effective remedy available to all when there are public law breaches by HMRC. (3) The right to propose ten more changes. Keith Gordon, barrister at Temple Tax Chambers (12 April)
What are you looking out for?
I think there’s likely to be lots of activity around offshore errors and the implications of the requirement to correct penalty regime. Offshore taxation is obviously incredibly complex, and the financial consequences of making errors are now very significant. I anticipate that HMRC will be much more proactive in this space as it begins to utilise the extensive information now available to it. Taking all that together, I anticipate there will be much more focus on what is and isn’t a reasonable excuse for offshore errors. Jon Preshaw, director of Jon Preshaw Tax Ltd (26 September)
Dismay over IR35
For me, right now it’s all about IR35. Lessons learned from the introduction of the equivalent public sector regime tell us that preparation is key, so taxpayers, advisers and HMRC have invested a massive amount of time and effort preparing themselves for the proposed changes. Imagine their dismay then when all the major political parties pledge to review the forthcoming changes (with Labour promising to halt the proposal altogether)? The uncertainty for businesses in the UK at the moment is unrelenting. It’s difficult, I think, to see so many people investing so much in compliance, only to then be told that they may be wasting their time – it’s a sorry state of affairs. Kate Featherstone, partner at Shoosmiths (3 December)
And finally, you might not know this about me but...
I was ordained a priest in the Church of England ten years ago. While incredibly fulfilling, it occasionally raises eyebrows (‘Seriously – a tax lawyer and clergyperson?’). Interestingly, there is generally much more acceptance among my work colleagues of me also being a priest than there is among my clergy colleagues of me also having a secular (for profit) job. There’s a parable in there somewhere! Will Morris, deputy global tax policy leader at PwC, and the chair of the Business at OECD (BIAC) Committee on Taxation and Fiscal Affairs (4 September)
A selection of highlights from this year’s ‘one minute with’ coverage.
What do you know now that you wish you’d known at the start of your career?
Apart from all the Grand National winners from 1997 to 2019, I wish that I had realised that the more interesting work generally comes from family (entrepreneurial businesses) as opposed to large corporate groups. Starting in a large mergers and acquisitions group in London, I remember hearing the Entrepreneurs’ Tax Group rather snobbishly being referred to as ‘the chip shop group’ by advisers who felt that ‘bigger is better’. I feel slightly sorry for those tax professionals who have let these kinds of prejudices restrict their careers. The dynamics of a family business has a lot more colour and interesting psychology than is the case with a large listed company. Andrew Marr, partner at Forbes Dawson (4 November)
Tips for success?
Have confidence in your own judgement. If something does not look right to you, it is probably not (and it would be good to air the issue any way). Do not be afraid to speak up, even if you are junior. As a partner, I really value all my team members forming their own views on particular scenarios. Jeremy Edwards, partner at Baker & McKenzie (14 October)
It may seem obvious but having a solid network of in-house tax peers is invaluable; it can be quite lonely and daunting being the only tax person in a business. In the North West, there are a few in-house tax forums that run throughout the year which give us the opportunity to share practical experience and best practices. Kate Rothwell, head of tax at AO Group (28 October)
I encourage my team to think of themselves as business people with expert tax knowledge, rather than solely tax advisers. If you work at an investment firm, then you should see yourself primarily as an investor, with the goal of building the best possible tax structures that will optimise the firm’s investing activity. Rather than staying put in the tax office, the tax team should be actively involved in strategic, structuring and investing discussions with various parts of the business. Shivani Lala, tax partner at SoftBank Investment Advisors
New rules causing a real problem?
DAC 6 (the new European rules imposing a requirement to disclose certain types of cross border transactions) is currently an area of focus for many tax practitioners. The challenging circumstances of these very broad rules being in force and applying to transactions for months before the UK has any settled rules should be of concern to everyone. Clients should consult their advisers early on the potential effects of these rules and how to manage any resultant disclosures. Jessica Kemp, partner at Travers Smith (25 October)
They may not qualify as ‘new’ any more (three years seems like a long time in tax), but I continue to find the FA 2016 anti-hybrid mismatches rules a particular bugbear. If you take the UK’s characteristic penchant for excessively elaborated statutory drafting, use it to write a regime targeting tax mismatches in a wide and varied range of different scenarios, and then deliberately (and with OECD BEPS action plan endorsement) leave out any tax avoidance purpose filter, perhaps it is no great surprise that the results are highly unsatisfactory. But it comes to something when HMRC writes over 400 pages of guidance on nearly 50 pages of legislation (and meanwhile ATAD covers the ground in a single page of operative rules). Paul Davison, partner at Freshfields Bruckhaus Deringer (24 May)
The residence nil rate band continues to mystify clients and practitioners alike. When is it applicable? When does is get lost through taper relief? How do the downsizing rules work? It is unfair on clients who cannot benefit because they have no children and can therefore only utilise the normal nil rate bands. It was a shame this measure was not tackled by the Office of Tax Simplification in its recent paper, but I have no doubt that its days are numbered. James Ward, head of the private client team at Kingsley Napley (18 July)
A case that caught your eye?
The recent Hannover Leasing case ([2019] UKFTT 262 (TC)) on FA 2003 s 75A has caused real concern amongst SDLT practitioners as it demonstrates a willingness by HMRC to apply that section to a situation where there was no SDLT avoidance but rather a structure which enabled a saving of SDLT by being done in one way (a sale of units) instead of another (a sale of land). If correct, it leaves us having to give quite strong s 75A health warnings in many seemingly innocent cases. It has also created a high degree of uncertainty around HMRC's approach to the guidance in its manuals, which is of potentially wider application. Sara Maccallum, the senior partner and head of the commercial tax group at Boodle Hatfield (7 June)
How might the profession change?
I expect more regulation will be introduced, which I think the tax profession will have to pay for. We are already experiencing this with OPBAS (the Office for Professional Body Anti-money Laundering Supervisors), where all professional body AML supervisors are contributing to their cost. How we respond to this depends on the type of regulation that will be introduced: full regulation, partial regulation or no regulation at all. The ATT is already considering the various issues for each scenario. There are many unaffiliated agents; if HMRC were to go down the full regulation route, who would regulate these people? Would they be required to belong to a professional body which could be relied upon to enforce standards, or perhaps be regulated by HMRC or a third party such as the FCA? Jane Ashton, chief executive of the ATT
I fear we are going to see further radical change with the possible splitting up of the ‘big 4’ and the segregation of audit from consultancy services. I suspect the tax profession will look completely different in ten years’ time. Alastair Kendrick, employment tax specialist (12 July)
The biggest influence will be technology. Machine learning and artificial intelligence will continue to automate compliance processes. Blockchain computing provides opportunities for real time reporting of transactions to tax authorities, and real time payment of tax, especially taxes such as VAT. I can see large corporations’ ERP systems essentially being open to tax authorities, with some traditional audit activity replaced by automated data analysis. The profession will have to work out how it integrates the use of technology into the training of those working in tax. Glyn Fullelove, CIOT president (21 June)
Digital innovation is something that tax authorities are looking at with as much interest as the private sector. In some jurisdictions, e-audits are increasingly common; in others, data analytics tools are used to match, store and review large data sets. Some countries like the UK have committed to pre-populating tax returns as far as possible by using third party data streams. This trend is set to continue, and it will fundamentally change how taxpayers and authorities interact. Annis Lampard, head of Deloitte’s tax disclosure and transparency team (10 October)
If you could make one change to tax law…
We’ve all heard the moral debate about everyone paying their ‘fair share’, but there comes a point where a line in the sand needs to be drawn and a more pragmatic view taken. A general avoidance settlement opportunity (similar, for example, to the LDF) with some abated terms (particularly on interest and penalties which are simply insurmountable to most investors) would facilitate a more cohesive collection of tax from failed avoidance schemes. Sarah Stenton, tax director at Stewarts (21 August)
I would make it mandatory for all existing and new HMRC powers to contain appeal provisions (and increase the resources available to the Courts and Tribunals Service). Those of us who have been working in litigation for some time will have seen the steady erosion of access to justice through chronic underfunding of the justice system and a raft of new powers given to HMRC which contain little or no effective judicial oversight. This has placed considerable pressure on the Admin Division of the High Court, which deals with judicial reviews. More broadly, however, the effect of such powers – whilst attractive to HMRC and governments in the short term – leaves open considerable scope for abuse and overreach, the effect of which, in my view, is likely to diminish trust between the taxpayer and HMRC in the long term. Robert Waterson, partner at RPC (14 June)
If you’ll permit me three… (1) Fewer Finance Bills and each subject to greater Parliamentary scrutiny (including from the House of Lords). (2) Taxpayers to be entitled to make judicial review challenges in the First-tier Tribunal. There should be an effective remedy available to all when there are public law breaches by HMRC. (3) The right to propose ten more changes. Keith Gordon, barrister at Temple Tax Chambers (12 April)
What are you looking out for?
I think there’s likely to be lots of activity around offshore errors and the implications of the requirement to correct penalty regime. Offshore taxation is obviously incredibly complex, and the financial consequences of making errors are now very significant. I anticipate that HMRC will be much more proactive in this space as it begins to utilise the extensive information now available to it. Taking all that together, I anticipate there will be much more focus on what is and isn’t a reasonable excuse for offshore errors. Jon Preshaw, director of Jon Preshaw Tax Ltd (26 September)
Dismay over IR35
For me, right now it’s all about IR35. Lessons learned from the introduction of the equivalent public sector regime tell us that preparation is key, so taxpayers, advisers and HMRC have invested a massive amount of time and effort preparing themselves for the proposed changes. Imagine their dismay then when all the major political parties pledge to review the forthcoming changes (with Labour promising to halt the proposal altogether)? The uncertainty for businesses in the UK at the moment is unrelenting. It’s difficult, I think, to see so many people investing so much in compliance, only to then be told that they may be wasting their time – it’s a sorry state of affairs. Kate Featherstone, partner at Shoosmiths (3 December)
And finally, you might not know this about me but...
I was ordained a priest in the Church of England ten years ago. While incredibly fulfilling, it occasionally raises eyebrows (‘Seriously – a tax lawyer and clergyperson?’). Interestingly, there is generally much more acceptance among my work colleagues of me also being a priest than there is among my clergy colleagues of me also having a secular (for profit) job. There’s a parable in there somewhere! Will Morris, deputy global tax policy leader at PwC, and the chair of the Business at OECD (BIAC) Committee on Taxation and Fiscal Affairs (4 September)
