The work is quite varied at the moment: structuring a property JV; setting up a UK company with an exciting new app making global electronic supplies for VAT, with some gambling tax related issues; advising on the EU expansion of an invoice discounting business; advising on a fund structure; and advising on a structure affected by the Budget change on taxing offshore property traders and developers.
What caught your eye in the current Finance Bill?
The new UK corporation tax charge for offshore property traders and developers (which is really a diverted profits tax for real estate trading). In particular, how a sale of shares in an offshore company holding the property as an investment can still be caught. It’s a sort of look through tax charge – you look through the corporate wrapper to the property trade. Such a concept was rejected when SDLT was enacted in 2003, as too difficult to target and to police. The proposed new IHT charge for non-doms who hold shares in non-UK incorporated companies owning a dwelling is on the same lines – you look through the corporate wrapper to the UK situs assets. It is a worrying trend for the future.
What recent tax cases have caught your eye and why?
I like the DPAS case [2015] UKUT 0585. It’s a good one for tax lawyers. The taxpayer sought (successfully) to avoid the problem of charging VAT to VAT-exempt dentists on ‘debt collection’ services, following AXA with some sensible tax planning. Instead of contracting with the dentists to invoice and collect their fees, it turned its contracts around and supplied its services to the patients instead, so its services could not be taxable debt collection. The tribunal agreed that the changes were consistent with economic and commercial reality, and were not abusive. This shows that sensible planning which accords with commercial reality is alive and kicking. Of course, the contract drafting and implementation is crucial. The case is not over, though, because of the Bookit II reference.
If you could make one change to a tax law or practice, what would it be?
A better non‑statutory ruling system please! It’s an old chestnut, but as the tax authorities impose more and more burdens on taxpayers to pay the right amount of tax, and be transparent, notwithstanding the complexity of the tax system, this surely has to be accompanied by an efficient and well-staffed ruling system. Due to staff shortages, the length of time it takes to get rulings is a deterrent to making any application at all and often the tax authority will try to wriggle out of giving a ruling by arguing it is covered by published guidance.
What effect would Brexit have on the UK tax system?
Who knows? It all depends on the terms of exit. The UK might join the EEA like Norway or Iceland, or negotiate a standalone free trade agreement with the EU, or different agreements covering individual trade sectors, or an ongoing customs union with the EU. My hunch is not much will change, as we will introduce mirror legislation to remove tax obstacles, promote stability for business and investment, and do our best to ensure that the UK maintains its position as a financial centre.
Aside from your immediate colleagues, whom in tax do you most admire?
The best tax lawyer I ever met: Christopher Cox. I had the privilege of sitting with him during my articles, which shaped my career, and recently the privilege of writing a textbook on SDLT with him (published by Sweet & Maxwell). Technically brilliant. He always read legislation carefully and wrote so simply and clearly, you only had to read his advice once. And importantly, he always had a life outside the office.
The work is quite varied at the moment: structuring a property JV; setting up a UK company with an exciting new app making global electronic supplies for VAT, with some gambling tax related issues; advising on the EU expansion of an invoice discounting business; advising on a fund structure; and advising on a structure affected by the Budget change on taxing offshore property traders and developers.
What caught your eye in the current Finance Bill?
The new UK corporation tax charge for offshore property traders and developers (which is really a diverted profits tax for real estate trading). In particular, how a sale of shares in an offshore company holding the property as an investment can still be caught. It’s a sort of look through tax charge – you look through the corporate wrapper to the property trade. Such a concept was rejected when SDLT was enacted in 2003, as too difficult to target and to police. The proposed new IHT charge for non-doms who hold shares in non-UK incorporated companies owning a dwelling is on the same lines – you look through the corporate wrapper to the UK situs assets. It is a worrying trend for the future.
What recent tax cases have caught your eye and why?
I like the DPAS case [2015] UKUT 0585. It’s a good one for tax lawyers. The taxpayer sought (successfully) to avoid the problem of charging VAT to VAT-exempt dentists on ‘debt collection’ services, following AXA with some sensible tax planning. Instead of contracting with the dentists to invoice and collect their fees, it turned its contracts around and supplied its services to the patients instead, so its services could not be taxable debt collection. The tribunal agreed that the changes were consistent with economic and commercial reality, and were not abusive. This shows that sensible planning which accords with commercial reality is alive and kicking. Of course, the contract drafting and implementation is crucial. The case is not over, though, because of the Bookit II reference.
If you could make one change to a tax law or practice, what would it be?
A better non‑statutory ruling system please! It’s an old chestnut, but as the tax authorities impose more and more burdens on taxpayers to pay the right amount of tax, and be transparent, notwithstanding the complexity of the tax system, this surely has to be accompanied by an efficient and well-staffed ruling system. Due to staff shortages, the length of time it takes to get rulings is a deterrent to making any application at all and often the tax authority will try to wriggle out of giving a ruling by arguing it is covered by published guidance.
What effect would Brexit have on the UK tax system?
Who knows? It all depends on the terms of exit. The UK might join the EEA like Norway or Iceland, or negotiate a standalone free trade agreement with the EU, or different agreements covering individual trade sectors, or an ongoing customs union with the EU. My hunch is not much will change, as we will introduce mirror legislation to remove tax obstacles, promote stability for business and investment, and do our best to ensure that the UK maintains its position as a financial centre.
Aside from your immediate colleagues, whom in tax do you most admire?
The best tax lawyer I ever met: Christopher Cox. I had the privilege of sitting with him during my articles, which shaped my career, and recently the privilege of writing a textbook on SDLT with him (published by Sweet & Maxwell). Technically brilliant. He always read legislation carefully and wrote so simply and clearly, you only had to read his advice once. And importantly, he always had a life outside the office.
