I lead Mills & Reeve’s national corporate, commercial and banking practices, as well as running the tax practice at the firm and retaining my client work. This represents about a third of the firm, including about 50 partners and over 200 people currently. It’s a fascinating and challenging role as it always throws up new opportunities and issues to navigate. I enjoy it hugely and the corporate lawyers don’t seem to mind a tax guy telling them what to do.
I’m currently dealing with IR35 queries and, perhaps surprisingly bearing in mind the general mood music on the economy, a full pipeline of M&A-related tax work. Due to the firm’s reputation in the health, education and not-for-profit sectors, there is also a constant diet of interesting issues for fascinating and unusual organisations.
What do you know now that you wish you’d known at the start of your career?
It’s all about people! By listening, taking an interest and doing what you can to help, you give yourself the opportunity to make a real difference. It should be the first thing we teach new recruits, as it’s a foundation on which you can build so much.
If you could make one change to tax, what would it be?
I’d tackle one of the biggest hurdles in structuring M&A deals, which is the UK tax position on potentially treating some earn-outs as subject to income tax rather than CGT, particularly when combined with the stamp duty contingency principle where there is a cap. This always seems to trigger particular consternation for US buyer clients who are used to being able to tie large chunks of contingent share consideration to ongoing employment of key individuals for a four to five year period, and to attach a cap to the earn-out formula without a penal stamp duty charge. There are of course various ways to mitigate the income tax risk and the stamp duty charge, but they often require some movement from a commercial deal that the parties were happy with. I don’t think I’ve ever seen a deal structure which involved a situation where some of the share consideration was obviously a replacement for a fair remuneration reward for the key individuals, but the income tax risk from the employment tie in still has to be negotiated and commercial deal changes made, which frustrates buyers and sellers alike.
Are there any new rules that are causing a particular problem?
The IR35 rules have been a headache for most clients for the last 18 months, not helped by all the recent confusion around whether they would survive in their current form (although now, for the time being at least, it seems as though they will). Many companies and public sector bodies have spent a lot of time, money and energy putting systems in place to comply with their obligations while trying hard not to alienate their entire off-payroll contractor base. The most common frustration we hear is a perception from many clients that although they are doing their best to comply with the rules, some of their competitors are not, putting them at a competitive advantage in the war for talent. Although the rules are aimed at a particular deemed mischief, they place a heavy burden on engagers who, on the whole, take a conservative approach and go through compliance processes and record results, even where it clear to everyone that the situation involves an outsourced service.
What should we look out for in 2023?
With the current chaos, who knows! I’m sure we’ll start to see some divergence from Europe on VAT rules, although for the time being that may be focused on raising income rather than reducing compliance, and it seems logical that we may also see some increase to CGT as it plays well to some of the galleries (although it rarely raises that much).
You might not know this about me but...
When I do get some time, I love discovering new places. Since lockdown, I have uncovered a love of walking, exploring some of the magnificent countryside we have in this country – and always ensuring there’s a good pub waiting at the end!
I lead Mills & Reeve’s national corporate, commercial and banking practices, as well as running the tax practice at the firm and retaining my client work. This represents about a third of the firm, including about 50 partners and over 200 people currently. It’s a fascinating and challenging role as it always throws up new opportunities and issues to navigate. I enjoy it hugely and the corporate lawyers don’t seem to mind a tax guy telling them what to do.
I’m currently dealing with IR35 queries and, perhaps surprisingly bearing in mind the general mood music on the economy, a full pipeline of M&A-related tax work. Due to the firm’s reputation in the health, education and not-for-profit sectors, there is also a constant diet of interesting issues for fascinating and unusual organisations.
What do you know now that you wish you’d known at the start of your career?
It’s all about people! By listening, taking an interest and doing what you can to help, you give yourself the opportunity to make a real difference. It should be the first thing we teach new recruits, as it’s a foundation on which you can build so much.
If you could make one change to tax, what would it be?
I’d tackle one of the biggest hurdles in structuring M&A deals, which is the UK tax position on potentially treating some earn-outs as subject to income tax rather than CGT, particularly when combined with the stamp duty contingency principle where there is a cap. This always seems to trigger particular consternation for US buyer clients who are used to being able to tie large chunks of contingent share consideration to ongoing employment of key individuals for a four to five year period, and to attach a cap to the earn-out formula without a penal stamp duty charge. There are of course various ways to mitigate the income tax risk and the stamp duty charge, but they often require some movement from a commercial deal that the parties were happy with. I don’t think I’ve ever seen a deal structure which involved a situation where some of the share consideration was obviously a replacement for a fair remuneration reward for the key individuals, but the income tax risk from the employment tie in still has to be negotiated and commercial deal changes made, which frustrates buyers and sellers alike.
Are there any new rules that are causing a particular problem?
The IR35 rules have been a headache for most clients for the last 18 months, not helped by all the recent confusion around whether they would survive in their current form (although now, for the time being at least, it seems as though they will). Many companies and public sector bodies have spent a lot of time, money and energy putting systems in place to comply with their obligations while trying hard not to alienate their entire off-payroll contractor base. The most common frustration we hear is a perception from many clients that although they are doing their best to comply with the rules, some of their competitors are not, putting them at a competitive advantage in the war for talent. Although the rules are aimed at a particular deemed mischief, they place a heavy burden on engagers who, on the whole, take a conservative approach and go through compliance processes and record results, even where it clear to everyone that the situation involves an outsourced service.
What should we look out for in 2023?
With the current chaos, who knows! I’m sure we’ll start to see some divergence from Europe on VAT rules, although for the time being that may be focused on raising income rather than reducing compliance, and it seems logical that we may also see some increase to CGT as it plays well to some of the galleries (although it rarely raises that much).
You might not know this about me but...
When I do get some time, I love discovering new places. Since lockdown, I have uncovered a love of walking, exploring some of the magnificent countryside we have in this country – and always ensuring there’s a good pub waiting at the end!
