From a client perspective, we have just come out of our busy period so we had lots of transactions with hard completion deadlines. To do this, we had to get through the work quickly, efficiently and make sure it was right first time. In respect of our business, the most pressing aspect is continuing to recruit good people, and we’re doing that by reassessing how we work and offering flexibility and good progression opportunities.
If you could make one change to tax, what would it be?
Aside from accelerating the simplification of the legislation, it would have to be improving access to HMRC. It has become increasingly difficult for agents and taxpayers to gain access to knowledgeable HMRC people who understand the tax regime. I believe that this is leading to a degeneration in the relationship between taxpayer and collector.
Has a recent tax case caught your eye?
Two actually – both involving claiming R&D relief. Hadee Engineering Co Ltd v HMRC [2020] UKFTT 497 (TC) where HMRC challenged the ability to claim R&D, as work was subcontracted to Hadee and more recently Quinn (London) Ltd v HMRC [2021] UKFTT 437 (TC) which seems to have contradicted HMRC’s interpretation of the subsidised expenditure legislation. Unfortunately this will result in confusion and uncertainty for clients when they are looking to claim R&D relief – so the sooner guidance and clarity is provided by HMRC, the better.
Are there any new rules that are causing a particular problem?
It’s not so much a new rule, but the change in the approach by HMRC to approving statutory clearance applications which is resulting in significant problems when assisting on M&A transactions. What seems to have been acceptable in the past (loan notes, holding companies to ring fence assets and cash) is now being denied by HMRC. This is stifling commercial transactions and disadvantaging clients, especially when they are selling to private equity. We are warning clients that the timeframe for a decision is now 60 days, not the statutory 30, as we are getting questions back on almost every request.
What advice would you give to someone starting out in the tax profession?
That passing exams makes you good at passing exams, not at being a good tax adviser. Being a good tax adviser is about listening and understanding your client’s objectives, even if they don’t fully understand them themselves.
What are you looking out for in the year ahead?
Inevitably the focus will be on tax rises. Those already announced for 2022, such as the rise in NICs and dividend tax. In 2023, there’s the social care levy and rise in corporation tax. The concern for taxpayers is that more are still to come, in particular an almost continuous rumour of a rise in CGT and some tinkering with the IHT regime to counteract a perceived inequality in how those with substantial resources are taxed.
And finally, you might not know this about me but…
My interest in tax arose when I started managing a bar whilst studying at university which was turning over more than the VAT threshold. It came to light that the bar wasn’t registered for VAT and as such we had a crash course in how a business should be run!
From a client perspective, we have just come out of our busy period so we had lots of transactions with hard completion deadlines. To do this, we had to get through the work quickly, efficiently and make sure it was right first time. In respect of our business, the most pressing aspect is continuing to recruit good people, and we’re doing that by reassessing how we work and offering flexibility and good progression opportunities.
If you could make one change to tax, what would it be?
Aside from accelerating the simplification of the legislation, it would have to be improving access to HMRC. It has become increasingly difficult for agents and taxpayers to gain access to knowledgeable HMRC people who understand the tax regime. I believe that this is leading to a degeneration in the relationship between taxpayer and collector.
Has a recent tax case caught your eye?
Two actually – both involving claiming R&D relief. Hadee Engineering Co Ltd v HMRC [2020] UKFTT 497 (TC) where HMRC challenged the ability to claim R&D, as work was subcontracted to Hadee and more recently Quinn (London) Ltd v HMRC [2021] UKFTT 437 (TC) which seems to have contradicted HMRC’s interpretation of the subsidised expenditure legislation. Unfortunately this will result in confusion and uncertainty for clients when they are looking to claim R&D relief – so the sooner guidance and clarity is provided by HMRC, the better.
Are there any new rules that are causing a particular problem?
It’s not so much a new rule, but the change in the approach by HMRC to approving statutory clearance applications which is resulting in significant problems when assisting on M&A transactions. What seems to have been acceptable in the past (loan notes, holding companies to ring fence assets and cash) is now being denied by HMRC. This is stifling commercial transactions and disadvantaging clients, especially when they are selling to private equity. We are warning clients that the timeframe for a decision is now 60 days, not the statutory 30, as we are getting questions back on almost every request.
What advice would you give to someone starting out in the tax profession?
That passing exams makes you good at passing exams, not at being a good tax adviser. Being a good tax adviser is about listening and understanding your client’s objectives, even if they don’t fully understand them themselves.
What are you looking out for in the year ahead?
Inevitably the focus will be on tax rises. Those already announced for 2022, such as the rise in NICs and dividend tax. In 2023, there’s the social care levy and rise in corporation tax. The concern for taxpayers is that more are still to come, in particular an almost continuous rumour of a rise in CGT and some tinkering with the IHT regime to counteract a perceived inequality in how those with substantial resources are taxed.
And finally, you might not know this about me but…
My interest in tax arose when I started managing a bar whilst studying at university which was turning over more than the VAT threshold. It came to light that the bar wasn’t registered for VAT and as such we had a crash course in how a business should be run!
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