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One minute with... Andrew Marr

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What’s keeping you busy at work?

As well as the usual (corporate reconstructions, tax-efficient exiting of shareholders etc.), I have been increasingly involved in providing SDLT advice both before and after property sales. It has become clear to me that there is something of a lacuna in this advisory space. House buyers believe that they are being advised on SDLT by their solicitors, although solicitors generally exclude this advice from their terms of engagement. As a result, many buyers are unwittingly paying far too much SDLT. The reasons for this can range from a failure to make use of a simple relief (such as multiple dwellings relief when a property has an annex) to misunderstandings about when the 3% surcharge is applicable.

What do you know now that you wish you’d known at the start of your career?

Apart from all the Grand National winners from 1997 to 2019, I wish that I had realised that the more interesting work generally comes from family (entrepreneurial businesses) as opposed to large corporate groups. Starting in a large mergers and acquisitions group in London, I remember hearing the ‘Entrepreneurs’ Tax Group’ rather snobbishly being referred to as ‘the chip shop group’ by advisers who felt that ‘bigger is better’. I feel slightly sorry for those tax professionals who have let these kinds of prejudices restrict their careers. The dynamics of a family business has a lot more colour and interesting psychology than is the case with a large listed company.

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

I would reverse the 2019 loan charge legislation. This is a clear example of retrospective legislation because it applies a tax charge based on loans which were taken out many years ago. A fair tax system needs to allow people to understand the tax consequences of their actions at the time when they act. I am not surprised that this legislation has already led to multiple suicides.

Are any new rules causing a real problem in practice?

The so-called ‘anti-phoenixing’ rules are quite problematic. To recap, these rules can give HMRC the opportunity to overturn capital treatment in respect of a liquidation distribution. The stakes are quite high because this can effectively involve a 10% tax charge (assuming entrepreneurs’ relief) becoming a 38.1% charge. On a strict reading, these rules can apply when a shareholder does something broadly similar to the company being wound up in a two-year period following the distribution. I would have expected better quality guidance on how these rules will apply, particularly as HMRC will not provide non-statutory clearance on these cases. For example, I am not sure that anybody knows what the position is if a serial property developer liquidates his company after the conclusion of a development project and then sets up a new company for a new project a few months later. I initially thought that this is just the kind of scenario that the rules are meant to capture, although I think that the consensus is now more that this can be defended on commercial grounds and by reference to ‘condition D’ in the legislation.

Has a recent tax case caught your eye?

I was quite interested in the First-tier Tribunal case of Bewley ([2019] UKFTT 65 (TC)) earlier this year. This was an SDLT case where HMRC was seeking to apply residential SDLT rates (as opposed to the much lower mixed-use rates) to a piece of land. This was rather a strange case, because it was hard to understand why it had reached the tribunal in the first place. HMRC argued that a completely derelict building with a serious asbestos problem and no radiators or pipework was suitable as a dwelling. The case is noticeable because the frustration of the judge clearly comes out in the case notes, and he all but reprimands HMRC for the position that it took. The case also has wider SDLT ramifications. In certain situations, it is advantageous for a structure to be classified as a dwelling. For example, if a buyer acquires a house with a subsidiary dwelling (or annex), then considerably less SDLT may be payable by claiming multiple dwellings relief. I suspect, however, that HMRC may not be as willing to accept that a derelict hut represents a dwelling in these circumstances, and it may ultimately look back and be glad that it lost this case.

Anything we should be looking out for in the next few months?

The prospect of VAT on school fees seems to be rearing its head again. If this materialises, I wonder if the immediate impact can be mitigated for schools and parents by upfront payments for future schooling before the rules kick in.

And finally, you might not know this about me but…

I spent ten minutes putting on the practice putting green at the Open (for a bet) before being unceremoniously marched off at the request of Phil Mickelson.

Issue: 1464
Categories: One minute with