Quite a bit, as the post-Easter period ramps up. Some interesting and varied structuring projects: setting up a new private equity fund; a ‘ground rent’ financing; a group reorganisation; and an in-bound investment in commercial real estate. Then there’s good amount of M&A and project finance, particularly in energy and infrastructure (which is one of the firm’s key sectors). There’s enough to keep the team out of trouble for a while.
If you could make one change to a tax law or practice, what would it be?
I would make HMRC’s published practice binding (other than where, say, aggressive tax avoidance is involved). Given how frequently HMT/HMRC have said ‘we’ll make this clear in guidance’ in recent years, it seems only fair.
If I were allowed a second change, I would rewrite the group relief precluding ‘arrangements’ rules for consortia. I do a good amount of joint venture work and, more than any other part of the tax code I regularly deal with, these rules seem to cause problems on purely commercial structures for illogical reasons. For example, why should surrenders between a shareholder and joint venture be denied in the period between arrangements to take the joint venture into the shareholder’s group arising and being completed? If nothing else, a change to these rules might make me slightly less unpopular with our project financing team when I suggest that their normal security arrangements should be changed to facilitate consortium relief!
What advice would you give to those starting out in tax?
I had great advice when learning the ropes at both Slaughter and May, and Deloitte. One point that has always stuck with me is that you need to understand the economic drivers on any transaction to advise on tax. And, before you think you understand a piece of legislation, try applying an example. On the drafting side, before you review any agreement, consider what it is that you actually need the agreement to achieve. I guess this all sounds fairly obvious – but I still apply those tips today.
Are there any new rules that are causing a particular problem?
One bugbear that crops up when dealing with corporate interest restriction rules (and, indeed, the anti-hybrids rules) is that limited partners in a fund are connected with each other. I appreciate that practitioners have struggled with this for a while in the close company rules, but there the implications are broadly manageable. With the increased debt fund lending market, I’m not sure that is always the case with these new rules. It is perfectly plausible that an LP in a private equity fund that owns a portfolio group could be an LP in a debt fund making (or at some point in the future becoming a lender under) a senior loan to the group, making part of the senior debt ‘related party’. That could, if the 30% barrier is exceeded, mean the new (regularly modelled) adage ‘third party debt should still be deductible’ is not always true.
You have worked at law firms and an accounting firm. Are they different?
It’s strange in a way because the essentials are the same: whether you’re at a law firm or accounting firm, you advise clients on tax. But, yes, the roles and work can be really quite different. Much of that is driven by size (bigger tax departments lead to specialisation; in smaller ones, you need to pick up whatever comes through the door) and the other disciplines practised by the firm outside tax, which influence the types of opportunities available to a tax department. I’ve enjoyed both and think each could learn a fair amount from the other. If you are a young tax adviser and have the opportunity, I think it would be well worth trying the other to see what extra skills and knowledge you could develop.
Finally, you might not know this about me but…
I’m learning to meditate. It’s surprisingly beneficial.
Quite a bit, as the post-Easter period ramps up. Some interesting and varied structuring projects: setting up a new private equity fund; a ‘ground rent’ financing; a group reorganisation; and an in-bound investment in commercial real estate. Then there’s good amount of M&A and project finance, particularly in energy and infrastructure (which is one of the firm’s key sectors). There’s enough to keep the team out of trouble for a while.
If you could make one change to a tax law or practice, what would it be?
I would make HMRC’s published practice binding (other than where, say, aggressive tax avoidance is involved). Given how frequently HMT/HMRC have said ‘we’ll make this clear in guidance’ in recent years, it seems only fair.
If I were allowed a second change, I would rewrite the group relief precluding ‘arrangements’ rules for consortia. I do a good amount of joint venture work and, more than any other part of the tax code I regularly deal with, these rules seem to cause problems on purely commercial structures for illogical reasons. For example, why should surrenders between a shareholder and joint venture be denied in the period between arrangements to take the joint venture into the shareholder’s group arising and being completed? If nothing else, a change to these rules might make me slightly less unpopular with our project financing team when I suggest that their normal security arrangements should be changed to facilitate consortium relief!
What advice would you give to those starting out in tax?
I had great advice when learning the ropes at both Slaughter and May, and Deloitte. One point that has always stuck with me is that you need to understand the economic drivers on any transaction to advise on tax. And, before you think you understand a piece of legislation, try applying an example. On the drafting side, before you review any agreement, consider what it is that you actually need the agreement to achieve. I guess this all sounds fairly obvious – but I still apply those tips today.
Are there any new rules that are causing a particular problem?
One bugbear that crops up when dealing with corporate interest restriction rules (and, indeed, the anti-hybrids rules) is that limited partners in a fund are connected with each other. I appreciate that practitioners have struggled with this for a while in the close company rules, but there the implications are broadly manageable. With the increased debt fund lending market, I’m not sure that is always the case with these new rules. It is perfectly plausible that an LP in a private equity fund that owns a portfolio group could be an LP in a debt fund making (or at some point in the future becoming a lender under) a senior loan to the group, making part of the senior debt ‘related party’. That could, if the 30% barrier is exceeded, mean the new (regularly modelled) adage ‘third party debt should still be deductible’ is not always true.
You have worked at law firms and an accounting firm. Are they different?
It’s strange in a way because the essentials are the same: whether you’re at a law firm or accounting firm, you advise clients on tax. But, yes, the roles and work can be really quite different. Much of that is driven by size (bigger tax departments lead to specialisation; in smaller ones, you need to pick up whatever comes through the door) and the other disciplines practised by the firm outside tax, which influence the types of opportunities available to a tax department. I’ve enjoyed both and think each could learn a fair amount from the other. If you are a young tax adviser and have the opportunity, I think it would be well worth trying the other to see what extra skills and knowledge you could develop.
Finally, you might not know this about me but…
I’m learning to meditate. It’s surprisingly beneficial.
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