As usual, I’ve got a wide variety of complex transactions on my desk at the moment – including domestic and cross-border M&A, multinational securitisations, a debt fund structure, private equity transactions, a range of real estate transactions, joint venture transactions and an oil deal. Transactional activity is definitely at a high level at the moment, which means every day is interesting, varied and full of challenge. There’s no chance of getting bored when every client and transaction is different.
If you could make one change to tax, what would it be?
There are lots of complicated things I could mention, but one thing that could be achieved relatively easily and have quite a significant impact would be to reform stamp duty and the process for paying it. From a procedural perspective, I think we’re partway there already now that HMRC has moved away from physical stamping of documents as a result of the success of the temporary covid-19 related measures introduced in March 2020. However, this could be improved further with use of a proper online system, with suitable options in the submission form for disclosing the complexities of particular transactions and for relevant documents to be uploaded directly into the submission. It would also be helpful to re-state and clarify the legislation regarding the territorial scope of stamp duty, which is a notoriously grey area and can lead to unnecessary uncertainty regarding the treatment of overseas transactions.
Are there any new rules that are of particular interest?
I’m very interested in the new qualifying asset holding company regime, which is scheduled to come into effect in 2022. If implemented appropriately, it has enormous potential to attract investment activity to the UK, as the reliefs on offer are very generous – in particular, relief from taxation on gains for most forms of shares/overseas real estate, an exemption for profits of an overseas property business where they are subject to overseas tax that corresponds to UK income tax or corporation tax, relief from UK withholding from payments of interest to investors (other than third party lenders), and allowing interest deductions for profit participating debt.
However, there are still a lot of details to be finalised and several key areas where draft legislation is yet to be published, and there is very little time remaining for a proper consultation process to be carried out before the new regime is intended to become effective. One key area where further guidance is required concerns the ‘activity’ condition and the extent to which certain activities are qualifying or non-qualifying activities for these purposes. For example, does active management of investments risk falling foul of the requirement for non-investment activities not to be carried on to a substantial extent? (And what does a ‘substantial extent’ even mean in this context?) There are also outstanding questions regarding whether the qualifying conditions for the regime should include a ‘purpose test’, whether there will be charges on entry to or exit from the regime, whether a minimum capital threshold will be required to be satisfied to qualify for the regime… Hopefully we’ll get more detail in the upcoming Budget.
What advice would you give to someone at the start of their tax career?
Be curious. Tax is extremely detailed and can often be prescriptive, but there is always something new to learn, and frequently there are multiple ways to approach a particular problem, so intellectual curiosity and an open-minded approach to problem solving are really important. You never give up learning if you work in tax.
Finally, you might not know this about me but...
One of my main hobbies is figure skating. I started taking lessons while I was at law school, and I now train two mornings a week before work – which means a 4:45am start to be on the ice when the rink opens at 6am.
As usual, I’ve got a wide variety of complex transactions on my desk at the moment – including domestic and cross-border M&A, multinational securitisations, a debt fund structure, private equity transactions, a range of real estate transactions, joint venture transactions and an oil deal. Transactional activity is definitely at a high level at the moment, which means every day is interesting, varied and full of challenge. There’s no chance of getting bored when every client and transaction is different.
If you could make one change to tax, what would it be?
There are lots of complicated things I could mention, but one thing that could be achieved relatively easily and have quite a significant impact would be to reform stamp duty and the process for paying it. From a procedural perspective, I think we’re partway there already now that HMRC has moved away from physical stamping of documents as a result of the success of the temporary covid-19 related measures introduced in March 2020. However, this could be improved further with use of a proper online system, with suitable options in the submission form for disclosing the complexities of particular transactions and for relevant documents to be uploaded directly into the submission. It would also be helpful to re-state and clarify the legislation regarding the territorial scope of stamp duty, which is a notoriously grey area and can lead to unnecessary uncertainty regarding the treatment of overseas transactions.
Are there any new rules that are of particular interest?
I’m very interested in the new qualifying asset holding company regime, which is scheduled to come into effect in 2022. If implemented appropriately, it has enormous potential to attract investment activity to the UK, as the reliefs on offer are very generous – in particular, relief from taxation on gains for most forms of shares/overseas real estate, an exemption for profits of an overseas property business where they are subject to overseas tax that corresponds to UK income tax or corporation tax, relief from UK withholding from payments of interest to investors (other than third party lenders), and allowing interest deductions for profit participating debt.
However, there are still a lot of details to be finalised and several key areas where draft legislation is yet to be published, and there is very little time remaining for a proper consultation process to be carried out before the new regime is intended to become effective. One key area where further guidance is required concerns the ‘activity’ condition and the extent to which certain activities are qualifying or non-qualifying activities for these purposes. For example, does active management of investments risk falling foul of the requirement for non-investment activities not to be carried on to a substantial extent? (And what does a ‘substantial extent’ even mean in this context?) There are also outstanding questions regarding whether the qualifying conditions for the regime should include a ‘purpose test’, whether there will be charges on entry to or exit from the regime, whether a minimum capital threshold will be required to be satisfied to qualify for the regime… Hopefully we’ll get more detail in the upcoming Budget.
What advice would you give to someone at the start of their tax career?
Be curious. Tax is extremely detailed and can often be prescriptive, but there is always something new to learn, and frequently there are multiple ways to approach a particular problem, so intellectual curiosity and an open-minded approach to problem solving are really important. You never give up learning if you work in tax.
Finally, you might not know this about me but...
One of my main hobbies is figure skating. I started taking lessons while I was at law school, and I now train two mornings a week before work – which means a 4:45am start to be on the ice when the rink opens at 6am.
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