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One minute with... Sophie Donnithorne-Tait

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What’s keeping you busy at work?
The majority of our clients are financial institutions – predominantly funds – many of whose investment structures will be affected by the EU tax developments contained in the Anti-Tax Avoidance Directives (for example, the interest limitation rules and the hybrids rules generally coming in from 2019 and 2020 respectively) and the impact of Brexit on US treaty eligibility. This year we have been working with clients to try to BEPS and Brexit-proof their new and existing investment structures and have found that the UK’s securitisation company regime can provide potential solutions to some of the issues. 
We’re keenly watching: (i) Ireland to see when ATAD I’s interest limitation rules will be introduced; and (ii) Luxembourg to hear the final word on whether the interest limitation will apply to materially increase the effective tax rate on the capital profit generated on distressed debt investments. Each of these developments is likely to increase interest from our clients in the UK as an alternative jurisdiction. 
If you could make one change to tax law or practice, what would it be? 
I’d make some changes to UK stamp duty, or preferably do away with it altogether (and just leave SDRT to do the work). For instance, it is a bit nuts that the territorial scope is based on a pretty vague and broad provision from 1891 – it’s never fun to have to explain to our corporate colleagues that they may want to arrange offshore signing ceremonies on large multinational restructurings for the transfer of non-UK issued securities between non-UK parties, especially in the context of a ‘voluntary’ duty.  
What do you know now that you didn’t know at the start of your career? 
How small the London tax adviser world is and how collaboratively tax practitioners at different firms tend to work together. Tax is a pretty friendly place to work in the sometimes harsh world of corporate law. 
Are there any Brexit-related tax issues  proving relevant to your practice?
The most relevant issue to our client base is probably that, post-Brexit, UK investors in non-UK entities seeking US treaty benefits (e.g. to obtain exemption from withholding on US source income) will cease to qualify as ‘equivalent beneficiaries’ for the purpose of the limitation on benefits articles in the relevant double tax treaties (i.e. those between the US and jurisdictions such as Ireland or Luxembourg). We are aware that the US Treasury is alive to this point and we have heard through the grapevine that the US may seek to unilaterally fix this issue, rather than bilaterally renegotiate all the relevant US DTTs. This would obviously be very welcome, but it remains to be seen how high up the issue is on the US government’s agenda. 
It’s also a bit of a pain that the UK government doesn’t seem motivated to amend FA 1986 to remove the 1.5% stamp duty and SDRT charging provisions on issues of shares (or transfers integral to a capital raise) to clearance services or depositary receipt issuers. The 2017 Autumn Budget announcement confirming that the government will continue not to apply these charges post-Brexit provides some comfort, but the strict legal position from March 2019 is not immediately obvious. As part of our financial restructuring work, we frequently look at inserting a new UK parent company on top of a non-UK restructured group and issuing the UK parent’s shares directly into a clearance service to assist trading of the shares and listing on the appropriate stock market. The clearance services tend to ask for legal opinions that these charges will not apply as a condition to allowing the shares entry to the system – I’m not quite sure what our opinions will look like after March – maybe I should get into the detail of the EU(W)A 2018…
And finally, you might not know this about me but…
I have set foot in every US state other than Alaska, and I lost my last baby tooth when I was 21.
Issue: 1418
Categories: One minute with