Well, I’ve just moved to DLA Piper after 21 years at Pinsent Masons and its legacy firms, so I’m trying to understand new IT and systems mainly! It feels a bit like driving a new and unfamiliar car. Other than that, I’m being kept busy by the finer intricacies of ORIP, royalty withholding tax, transfer pricing, unallowable purpose blocks, deliberate inaccuracies allegations – and a first principles question about whether various receipts are capital or revenue in nature, for which the main case law arises from between the two world wars.
If you could make one change to tax, what would it be?
A bit more use of Franglais in tax legislation maybe, so that Boris pays attention. In particular, and without wanting to sound like a campaign group, it strikes me that the UK is a little bit behind the curve in terms of developing tax policy around climate change and greenhouse gas emissions. The EU is running away with the agenda, including by recognising a role for more carbon taxes in influencing behaviour and as a pure revenue-raiser. The UK seems stuck on keeping just to an emission trading scheme as the only form of ‘carbon pricing’. The EU is also pushing through innovations such as the carbon border adjustment mechanism (applying a carbon tax on imports to level them up with the carbon price paid on domestic production falling under the EU’s emissions trading scheme), broadening the base of its ETS and proposing ETS 2, as well as recasting the Energy Taxation Directive.
Are there any new rules that are causing a particular problem?
The proposed notification of uncertain tax treatment rules. At first, I thought it was clear what HMRC is trying to achieve and the only difficult was in finding the right set of words. But now, with this idea of reporting a ‘substantive possibility’ that a position might be overturned in court, I’m not so sure. This seems to be asking too much of the taxpayer: the term lacks a substantial definition (excuse the pun) and essentially amounts to disclosure of positions with merits better than 50% but less than, what, 60%? 70%? ‘Should’ opinions? I’d also be worried about later repercussions: if a treatment is disclosed because there is substantial doubt, and HMRC mounts a successful challenge, isn’t it going to ask what you were doing taking positions with substantial doubt in the first place? It is good that the Finance Bill Sub-Committee has started an enquiry into the measure.
What developments should we look out for later this year?
It takes a while for differences of view on new pieces of legislation to reach dispute resolution phase or the courts. I always joke that, as a tax litigator, I am in the Yellow and Orange books from at least five years ago and I use the latest versions as a monitor stand at home.
On that measure, we would normally expect to see some cases about DPT coming through by now – but the legislation has been such a success, and a sledgehammer, that we are not likely to see that happen.
Some of this latest legislation (ORIP, DST) is essentially extra-territorial in its scope and in some areas ripe for challenge – bringing a clash of legal principles (expansive interpretation of avoidance legislation versus narrow interpretation required under international comity).
I think corporates generally accept there was a need for action, but it will be interesting to see how quickly pillars one and two come on stream – and what impact such collective action at the international community level will have on the UK’s long-arm legislation.
You might not know this about me but...
I was really into BMXing when I was a kid and was even sponsored once by ‘Wheels of Oakham’ – which meant wearing their T-shirt in a freestyle competition (once only!). I have a BMX again now. I was also once asked out by Kylie Minogue but politely declined. Okay, so I might have misconstrued that encounter.
Well, I’ve just moved to DLA Piper after 21 years at Pinsent Masons and its legacy firms, so I’m trying to understand new IT and systems mainly! It feels a bit like driving a new and unfamiliar car. Other than that, I’m being kept busy by the finer intricacies of ORIP, royalty withholding tax, transfer pricing, unallowable purpose blocks, deliberate inaccuracies allegations – and a first principles question about whether various receipts are capital or revenue in nature, for which the main case law arises from between the two world wars.
If you could make one change to tax, what would it be?
A bit more use of Franglais in tax legislation maybe, so that Boris pays attention. In particular, and without wanting to sound like a campaign group, it strikes me that the UK is a little bit behind the curve in terms of developing tax policy around climate change and greenhouse gas emissions. The EU is running away with the agenda, including by recognising a role for more carbon taxes in influencing behaviour and as a pure revenue-raiser. The UK seems stuck on keeping just to an emission trading scheme as the only form of ‘carbon pricing’. The EU is also pushing through innovations such as the carbon border adjustment mechanism (applying a carbon tax on imports to level them up with the carbon price paid on domestic production falling under the EU’s emissions trading scheme), broadening the base of its ETS and proposing ETS 2, as well as recasting the Energy Taxation Directive.
Are there any new rules that are causing a particular problem?
The proposed notification of uncertain tax treatment rules. At first, I thought it was clear what HMRC is trying to achieve and the only difficult was in finding the right set of words. But now, with this idea of reporting a ‘substantive possibility’ that a position might be overturned in court, I’m not so sure. This seems to be asking too much of the taxpayer: the term lacks a substantial definition (excuse the pun) and essentially amounts to disclosure of positions with merits better than 50% but less than, what, 60%? 70%? ‘Should’ opinions? I’d also be worried about later repercussions: if a treatment is disclosed because there is substantial doubt, and HMRC mounts a successful challenge, isn’t it going to ask what you were doing taking positions with substantial doubt in the first place? It is good that the Finance Bill Sub-Committee has started an enquiry into the measure.
What developments should we look out for later this year?
It takes a while for differences of view on new pieces of legislation to reach dispute resolution phase or the courts. I always joke that, as a tax litigator, I am in the Yellow and Orange books from at least five years ago and I use the latest versions as a monitor stand at home.
On that measure, we would normally expect to see some cases about DPT coming through by now – but the legislation has been such a success, and a sledgehammer, that we are not likely to see that happen.
Some of this latest legislation (ORIP, DST) is essentially extra-territorial in its scope and in some areas ripe for challenge – bringing a clash of legal principles (expansive interpretation of avoidance legislation versus narrow interpretation required under international comity).
I think corporates generally accept there was a need for action, but it will be interesting to see how quickly pillars one and two come on stream – and what impact such collective action at the international community level will have on the UK’s long-arm legislation.
You might not know this about me but...
I was really into BMXing when I was a kid and was even sponsored once by ‘Wheels of Oakham’ – which meant wearing their T-shirt in a freestyle competition (once only!). I have a BMX again now. I was also once asked out by Kylie Minogue but politely declined. Okay, so I might have misconstrued that encounter.
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