One minute with Elizabeth Spencer is a Tax Counsel at McDermott Will & Schulte.
What’s keeping you busy at work?
Since I joined McDermott ten months ago, I’ve been busy on an exciting mix of things: (1) the ‘day job’ – transactions have been especially busy (mid-market PE, bolt-ons and related financing); (2) getting acquainted with everyone at the newly merged firm; and (3) helping to grow the UK tax team.
What do you know now that you wish you’d known at the start of your career?
Get comfortable with never feeling like you completely know all there is to know about tax. The ability to be able to work on a range of things from transactions, advisory work and contentious matters (sometimes all in one day) is what makes this job really interesting. The constantly evolving tax legislation also provides plenty of opportunities to become an ‘expert’, even at a relatively early stage in your career.
Separately, never underestimate the importance of a due diligence report – not only can it provide valuable commercial insight into the transaction and/or a particular company or market, it also provides you with the chance to look under the hood of a company. This can be useful for issue spotting on that particular piece of work, but it can also be a source of potential future work.
If you could make one change to tax, what would it be?
The process around UK withholding tax on interest payments, where relief is available under a double tax treaty.
I have spent far too much time drafting disclosures to HMRC hoping they will agree to apply the (currently paused) concession in HMRC’s International Manual at INTM413230; negotiating the definition of ‘treaty lender’ in finance agreements; and negotiating interest deferral provisions. The current system, in particular the technical requirement to pay tax you have failed to withhold and then reclaim (even where HMRC have subsequently confirmed payment can be made after withholding at the relevant treaty rate) is unreasonable and disproportionate.
I appreciate the concerns that some have raised regarding shifting the risk to borrowers if the proposed self-assessment system is introduced. Perhaps the change doesn’t need to be fundamental. For example, a simple change could be to allow passported lenders to notify HMRC of the loans to which it is a party. The current system seems to impose disproportionate penalties on borrowers who forget to hand in their homework, rather than failing them when they get the exam answer wrong.
The recently published consultation (which mentions, but unfortunately does not include, the concession) was extremely welcome!
Comment on a recent development.
The recent consultation on the reform to taxation of UK-resident members of LLCs and other hybrids certainly caught my eye. I think most people would agree that this is a welcome consultation, and the suggestion that the long-standing issue of double taxation for UK members of LLCs will be resolved is certainly positive news.
However, what is not completely clear is whether the proposal to treat interests in LLCs as transparent by default is necessarily the best way to address the issue. Looking at the classification of the vehicle (rather than, for example, addressing the double taxation through a credit) could risk opening a Pandora’s box of tax and other more practical issues for LLC members.
And finally, you might not know this about me but...
I love running, even if I do it really, really slowly, and would encourage anyone who gets the opportunity to take part in the London Marathon to do it. Nothing beats the high of crossing that finish line – not even a 23 December deal signing!
One minute with Elizabeth Spencer is a Tax Counsel at McDermott Will & Schulte.
What’s keeping you busy at work?
Since I joined McDermott ten months ago, I’ve been busy on an exciting mix of things: (1) the ‘day job’ – transactions have been especially busy (mid-market PE, bolt-ons and related financing); (2) getting acquainted with everyone at the newly merged firm; and (3) helping to grow the UK tax team.
What do you know now that you wish you’d known at the start of your career?
Get comfortable with never feeling like you completely know all there is to know about tax. The ability to be able to work on a range of things from transactions, advisory work and contentious matters (sometimes all in one day) is what makes this job really interesting. The constantly evolving tax legislation also provides plenty of opportunities to become an ‘expert’, even at a relatively early stage in your career.
Separately, never underestimate the importance of a due diligence report – not only can it provide valuable commercial insight into the transaction and/or a particular company or market, it also provides you with the chance to look under the hood of a company. This can be useful for issue spotting on that particular piece of work, but it can also be a source of potential future work.
If you could make one change to tax, what would it be?
The process around UK withholding tax on interest payments, where relief is available under a double tax treaty.
I have spent far too much time drafting disclosures to HMRC hoping they will agree to apply the (currently paused) concession in HMRC’s International Manual at INTM413230; negotiating the definition of ‘treaty lender’ in finance agreements; and negotiating interest deferral provisions. The current system, in particular the technical requirement to pay tax you have failed to withhold and then reclaim (even where HMRC have subsequently confirmed payment can be made after withholding at the relevant treaty rate) is unreasonable and disproportionate.
I appreciate the concerns that some have raised regarding shifting the risk to borrowers if the proposed self-assessment system is introduced. Perhaps the change doesn’t need to be fundamental. For example, a simple change could be to allow passported lenders to notify HMRC of the loans to which it is a party. The current system seems to impose disproportionate penalties on borrowers who forget to hand in their homework, rather than failing them when they get the exam answer wrong.
The recently published consultation (which mentions, but unfortunately does not include, the concession) was extremely welcome!
Comment on a recent development.
The recent consultation on the reform to taxation of UK-resident members of LLCs and other hybrids certainly caught my eye. I think most people would agree that this is a welcome consultation, and the suggestion that the long-standing issue of double taxation for UK members of LLCs will be resolved is certainly positive news.
However, what is not completely clear is whether the proposal to treat interests in LLCs as transparent by default is necessarily the best way to address the issue. Looking at the classification of the vehicle (rather than, for example, addressing the double taxation through a credit) could risk opening a Pandora’s box of tax and other more practical issues for LLC members.
And finally, you might not know this about me but...
I love running, even if I do it really, really slowly, and would encourage anyone who gets the opportunity to take part in the London Marathon to do it. Nothing beats the high of crossing that finish line – not even a 23 December deal signing!
