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One minute with... Kate Habershon

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Your practice focuses on advising corporations and funds with respect to mergers and acquisitions, corporate finance, private equity, executive compensation and financial products.

Comment on a key challenge you’ve faced in practice.
In the international arena, the complexity and lack of certainty
surrounding various tax issues can prove problematic. I have on a number of occasions seen these issues cause groups to locate international holding companies outside the UK, having initially considered the UK. The dividend exemption, limited scope of CFC rules and substantial shareholding exemption are great advantages for the UK to offer, but it is unfortunate that unlike some of the regimes of many of the jurisdictions with which the UK competes, these rules are complicated and do not offer a broad brush exemption that taxpayers can be sure will apply to them in years to come. And I have never really understood why we need to have the worldwide debt cap when we already have wide transfer pricing/thin capitalisation/unallowable purpose rules.

Aside from your immediate colleagues, whom in tax do you most admire?
I have worked with many excellent tax lawyers over the years, but one who stands out for me is Ian Stanley, a former partner at Mallesons (and now a barrister) in Sydney. He taught me how to adopt a methodical and analytical approach to tax law that serves well in every area of tax that I have come across to date (both in Australia and the UK). He also taught me that knowing tax law alone is not enough – a good knowledge of company law and contract law goes a long way.

What advice would you give to someone new to the profession?
Never assume that you are the only one who does not understand. Always ask questions if something is not clear, and often you will find either that it is not clear to everyone else, or that the issue has not been properly thought through yet.

If you could make one change to UK tax law or practice, what would it be?
I would welcome true tax simplification, not simply piling on more and more new legislation without fully repealing the old law. In my view, this should address not only the substance of the law but the actual approach taken to drafting.

A good place to start would be to have every defined term identified as such (for example, with an asterisk) with a single glossary giving all the definitions or links to the relevant section. For example, do we really need more than one definition of ‘connected’? Long gone are the days of two Yellow books and one Orange book!

What caught your eye among the draft Finance Bill 2015 provisions?
I was surprised to see the proposed diverted profits tax. It seems to go against the purported desire to make the UK attractive as an international holding company regime, and the timing is curious given the UK’s involvement in (and apparent support of) the BEPS project and the recent amendments to the CFC rules. As with many such anti-avoidance provisions, I suspect it will primarily mean more time and expense spent on restructuring inoffensive arrangements than revenues raised directly from this regime by HMRC.

Kate Habershon is a partner at Morgan, Lewis & Bockius UK.