You joined Thomas Eggar three years ago with the aim of growing the firm’s specialist contentious tax services. What was the thinking behind this and how is it going?
Historically, contentious tax has been thought of as reactive, as responding to HMRC challenge. That is still a significant area. However, we want to be proactive, to think about exposure to HMRC challenge at the planning stage. We want to check the foundations before we start building. The broader service has been well received, helped by the sense that HNWIs are a prime target for HMRC. We try to go beyond an analysis of the legislation so that our clients have a sense of their options in the real world and balance risks and advantages.
Looking back on your career to date, what key lesson have you learned?
When a client asks you to do something, before doing it try to find out what they hope to achieve. Sometimes doing what they say they want may not achieve what they really really want.
Which recent tax case caught your eye?
The Court of Session (CoS) judgment on the Rangers case (Murray Group Holdings Ltd [2015] CSIH 77). It seems common ground that employee benefit trusts (EBTs) were set up to get money into the pockets of players while avoiding PAYE. The first two courts said you could not look through the legal forms of trusts and loans to recategorise the monies as employment income. The CoS said when you look at the true nature of the transactions you can. You should apply common sense. That has implications beyond EBTs. Should it be appealed to the Supreme Court, that will be an interesting judgment.
What got your attention from last week’s Autumn Statement?
In the background papers, it was confirmed that, after consultation, HMRC is taking forward the four proposals on tackling offshore tax evasion. From the proposals, it is clear that ‘evasion’ is not limited to deliberate attempts to defraud the revenue. The intention is to increase financial penalties and expand the scope of criminality. The financial and criminal consequences will impact on advisers as well as taxpayers. This will apply in some cases where the taxpayer and adviser thought the planning was compliant.
How much power should the state have to ensure taxpayers fulfil their duty of paying the correct amount of tax?
The last six years have seen huge increases in the amounts of information coming into revenue authorities both from other fiscal authorities and institutions in their own country. Allied to that has been the development of sophisticated IT systems to cross-reference and analyse that information. The justification is that this power is required to attack aggressive avoidance and evasion.
With an ever more complex legislation, it can be difficult to identify what is and is not allowable. Consequently we are now in a position where: it is easy to get things wrong; it is more likely the state will find out; and penalties are increasing even where there is no intention to avoid tax.
Britain has traditionally been a place where most people think the tax burden is just about fair. If the desire of the state to catch a few who abuse the system erodes the trust of the many who try to get it right, that would be unfortunate.
Tell us a secret.
After leaving university, I worked at universities in Africa and Asia teaching language and linguistics. One of my roles was to develop courses taught through English as a second language for different disciplines, such as maths and science. I needed to get a grasp of the subject matter from experts in their subjects, assimilate different views on how their subjects should be taught as the subject experts came from a variety of cultural backgrounds and I then needed to persuade them that I had something useful to say. It was a seamless transition into the world of contentious tax.
You joined Thomas Eggar three years ago with the aim of growing the firm’s specialist contentious tax services. What was the thinking behind this and how is it going?
Historically, contentious tax has been thought of as reactive, as responding to HMRC challenge. That is still a significant area. However, we want to be proactive, to think about exposure to HMRC challenge at the planning stage. We want to check the foundations before we start building. The broader service has been well received, helped by the sense that HNWIs are a prime target for HMRC. We try to go beyond an analysis of the legislation so that our clients have a sense of their options in the real world and balance risks and advantages.
Looking back on your career to date, what key lesson have you learned?
When a client asks you to do something, before doing it try to find out what they hope to achieve. Sometimes doing what they say they want may not achieve what they really really want.
Which recent tax case caught your eye?
The Court of Session (CoS) judgment on the Rangers case (Murray Group Holdings Ltd [2015] CSIH 77). It seems common ground that employee benefit trusts (EBTs) were set up to get money into the pockets of players while avoiding PAYE. The first two courts said you could not look through the legal forms of trusts and loans to recategorise the monies as employment income. The CoS said when you look at the true nature of the transactions you can. You should apply common sense. That has implications beyond EBTs. Should it be appealed to the Supreme Court, that will be an interesting judgment.
What got your attention from last week’s Autumn Statement?
In the background papers, it was confirmed that, after consultation, HMRC is taking forward the four proposals on tackling offshore tax evasion. From the proposals, it is clear that ‘evasion’ is not limited to deliberate attempts to defraud the revenue. The intention is to increase financial penalties and expand the scope of criminality. The financial and criminal consequences will impact on advisers as well as taxpayers. This will apply in some cases where the taxpayer and adviser thought the planning was compliant.
How much power should the state have to ensure taxpayers fulfil their duty of paying the correct amount of tax?
The last six years have seen huge increases in the amounts of information coming into revenue authorities both from other fiscal authorities and institutions in their own country. Allied to that has been the development of sophisticated IT systems to cross-reference and analyse that information. The justification is that this power is required to attack aggressive avoidance and evasion.
With an ever more complex legislation, it can be difficult to identify what is and is not allowable. Consequently we are now in a position where: it is easy to get things wrong; it is more likely the state will find out; and penalties are increasing even where there is no intention to avoid tax.
Britain has traditionally been a place where most people think the tax burden is just about fair. If the desire of the state to catch a few who abuse the system erodes the trust of the many who try to get it right, that would be unfortunate.
Tell us a secret.
After leaving university, I worked at universities in Africa and Asia teaching language and linguistics. One of my roles was to develop courses taught through English as a second language for different disciplines, such as maths and science. I needed to get a grasp of the subject matter from experts in their subjects, assimilate different views on how their subjects should be taught as the subject experts came from a variety of cultural backgrounds and I then needed to persuade them that I had something useful to say. It was a seamless transition into the world of contentious tax.
