Market leading insight for tax experts
View online issue

One minute with... Robert Young

printer Mail
What’s keeping you busy at work?

It is a fairly broad tax practice here at Taylor Wessing, with a healthy diet of corporate transactional and structuring work (particularly cross-border, which is encouraging, all things considered), real estate investment and development advice for domestic and international clients, fund structuring and formation and advice to SMEs and investors on the venture capital reliefs. I also enjoy a range of VAT advisory mandates, ranging from tricky property developments to treatment of new food products –which can sometimes feel like being back in the CTA exam hall!

If you could make one change to tax law, what would it be?

We work a great deal with SMEs and private capital backed business generally, and eligibility for entrepreneurs’ relief from CGT is important and valuable to our clients. It is good to note that some of the problems with the 5% ordinary share capital and voting power requirements for shareholders have been acknowledged (the consultation on addressing the dilution of founders below 5% is welcome) – but with the advent of the investors’ relief, I would favour cutting through the complexity and extending relief to all holdings of ordinary shares in unlisted trading companies. Equity participation in companies is a valuable driver for business growth, and this would seem to be an area where a more liberal approach could be extended without great cost to the exchequer. I wouldn’t want this to be read as a call for taper relief to return, mind!

Are there any new rules that are causing a particular problem?

The trend for legislation that is cast more widely than necessary to attempt to counter perceived potential for avoidance can give rise to damaging unintended consequences. One example would be last year’s extension of IHT to apply to assets deriving their value from UK residential property, regardless of the domicile of the asset holder. The legislation purports to address the risk of taxpayers seeking to depress the taxable value of assets using debt by also treating assets that derive value from loans relating to UK residential property as falling within the taxable estate. A (presumably unintended) consequence of this is that some owners of businesses involved in arm’s length lending to unrelated borrowers may find themselves in principle within the scope of IHT. This seems to be to be an unjustifiable and disproportionate outcome that could be avoided with more targeted anti-avoidance measures or a suitable exemption.

Has a recent case has caught your eye?

Although a little while back now, the Upper Tribunal’s decision in McQuillan [2017] UKUT 344 (TCC) provided some welcome clarity on the meaning of ordinary share capital, adding the observation that the respondents were unfortunate that the application of the legislation denied them relief because the combination of the threshold tests in TCGA 1992 s 169S and the ordinary share capital definition in ITA 2007 s 989 represented a clear line in the sand, which on the facts of the case the taxpayers were on the wrong side of. On the positive side, this accords with a view that I have long held that planning to secure entrepreneurs’ relief through close attention to the 5% ordinary share capital and voting power thresholds should be robust, given the mechanical nature of the tests, but I also think the case and its outcome tend to support my belief that the 5% limits should be removed.

You might not know this about me...

I could have had an alternative career in the military. I was privileged to be able to fly extensively with the RAF whilst a student (going solo is one of my most treasured memories), followed by a period in the Royal Naval Reserve, during which time I had some unbelievable experiences, including one memorable overnight passage from Belgium, navigating a safe route for a fleet tender between supertankers in a force 10 storm! My wife has long grown tired of my Uncle Albert ‘when I was in the Navy’ stories…