If you could make one change to UK tax law or practice, what would it be?
Many would agree that our tax system is creaking under the enormous weight of ever increasing tax legislation. We already have the longest tax code in the world and the 665-page Finance (No. 2) Bill 2017-19 has recently added another huge chunk to it. I believe I am not alone in asking for a period of minimal change in tax legislation – a period of consolidation where we can take stock of and digest the numerous (often complex) changes in recent years. In a post-Brexit UK, we also have to find a way of making our tax code more-friendly for businesses. In my view, this means streamlining our tax laws so that they are fit for purpose.
I have another plea. We have plenty of evidence that HMRC is clearly under-resourced. Since HMRC is in charge of collecting tax revenues, it should be the best resourced of all government departments.
Which recent tax case has caught your eye?
The recent Supreme Court ruling in the Rangers case gives us the clearest demonstration yet of the application of the courts’ purposive approach to the interpretation of tax law. In this case, the crunch point was that any re-direction of ‘pay’ to an employee benefit trust (or other special ‘vehicle’) is earnings in the relevant employee’s hands. These types of tax planning arrangements are therefore ineffective. In the light of this robust decision, the obvious ‘follow-up’ question is whether we still need the complex ‘disguised remuneration legislation?
Can you share a tax tip?
One of my specialisms is corporate reorganisations and demergers. In this context, I fail to understand why we still have an entirely different tax treatment for ‘old’ (pre-1 April 2002) and ‘new’ (post-31 March 2002) goodwill and intangibles.
Given the FA 2011 changes to SSE, degrouping charges relating to ‘old’ goodwill will often be effectively exempted under SSE whereas the degrouping charges for ‘new’ goodwill remain taxable under the corporate intangibles code. Similarly, since ‘old’ goodwill degrouping charges would be sheltered on a corporate reorganisation under TCGA 1992 s 139, but this protection does not apply to ‘new’ goodwill. Now that corporate tax relief has been abolished for goodwill and customer related intangibles (acquired after July 2015), there seems little justification for retaining this arbitrary distinction.
On the other hand, if the reorganisation can be structured within the statutory demerger code, a specific degrouping exemption is provided for both types of goodwill.
When planning a corporate demerger involving goodwill etc., care must be taken to identify the tax status of goodwill as this may have a direct impact on the way the reorganisation should be structured.
What advice would you give to someone new to the profession?
Remember that once you have passed your CIOT tax exams, this is only just the beginning. To do well you need to ‘live and breathe tax’ and never pass up the opportunity to discuss tax issues with experienced tax practitioners. On a personal level, I would also say that I have found my involvement in tax committee work for both the CIOT and ICAEW Tax Faculty immensely beneficial. It enables me to network with my peers and keeps me up to date with current tax issues – plus I have made many good friends along the way!
Finally, you might not know this about me but...
I am a lifelong West Ham United fan and was invited to be a BM6 member in 2016, which enables me to enjoy many benefits whilst watching my team. I also sponsor the ‘best individual player performance of the year’ at the annual West Ham Player Awards.
If you could make one change to UK tax law or practice, what would it be?
Many would agree that our tax system is creaking under the enormous weight of ever increasing tax legislation. We already have the longest tax code in the world and the 665-page Finance (No. 2) Bill 2017-19 has recently added another huge chunk to it. I believe I am not alone in asking for a period of minimal change in tax legislation – a period of consolidation where we can take stock of and digest the numerous (often complex) changes in recent years. In a post-Brexit UK, we also have to find a way of making our tax code more-friendly for businesses. In my view, this means streamlining our tax laws so that they are fit for purpose.
I have another plea. We have plenty of evidence that HMRC is clearly under-resourced. Since HMRC is in charge of collecting tax revenues, it should be the best resourced of all government departments.
Which recent tax case has caught your eye?
The recent Supreme Court ruling in the Rangers case gives us the clearest demonstration yet of the application of the courts’ purposive approach to the interpretation of tax law. In this case, the crunch point was that any re-direction of ‘pay’ to an employee benefit trust (or other special ‘vehicle’) is earnings in the relevant employee’s hands. These types of tax planning arrangements are therefore ineffective. In the light of this robust decision, the obvious ‘follow-up’ question is whether we still need the complex ‘disguised remuneration legislation?
Can you share a tax tip?
One of my specialisms is corporate reorganisations and demergers. In this context, I fail to understand why we still have an entirely different tax treatment for ‘old’ (pre-1 April 2002) and ‘new’ (post-31 March 2002) goodwill and intangibles.
Given the FA 2011 changes to SSE, degrouping charges relating to ‘old’ goodwill will often be effectively exempted under SSE whereas the degrouping charges for ‘new’ goodwill remain taxable under the corporate intangibles code. Similarly, since ‘old’ goodwill degrouping charges would be sheltered on a corporate reorganisation under TCGA 1992 s 139, but this protection does not apply to ‘new’ goodwill. Now that corporate tax relief has been abolished for goodwill and customer related intangibles (acquired after July 2015), there seems little justification for retaining this arbitrary distinction.
On the other hand, if the reorganisation can be structured within the statutory demerger code, a specific degrouping exemption is provided for both types of goodwill.
When planning a corporate demerger involving goodwill etc., care must be taken to identify the tax status of goodwill as this may have a direct impact on the way the reorganisation should be structured.
What advice would you give to someone new to the profession?
Remember that once you have passed your CIOT tax exams, this is only just the beginning. To do well you need to ‘live and breathe tax’ and never pass up the opportunity to discuss tax issues with experienced tax practitioners. On a personal level, I would also say that I have found my involvement in tax committee work for both the CIOT and ICAEW Tax Faculty immensely beneficial. It enables me to network with my peers and keeps me up to date with current tax issues – plus I have made many good friends along the way!
Finally, you might not know this about me but...
I am a lifelong West Ham United fan and was invited to be a BM6 member in 2016, which enables me to enjoy many benefits whilst watching my team. I also sponsor the ‘best individual player performance of the year’ at the annual West Ham Player Awards.
