I am fortunate to have a very varied practice. I advise clients of different sizes across different sectors, each with its own themes and challenges. Currently, several multinational groups that we act for are in the process of rationalising their group structures. Withholding taxes, particularly on UK source interest, is a running theme for high growth companies that have issued convertible debt to investors. Residential property purchasers are grappling with the extraordinary complexity of SDLT. A few lender clients are reviewing their operations. And a high-tech client is working through VAT on a tripartite agreement with various barters. And that was just last week!
What’s a hot topic affecting clients at the moment?
We have clients who have contracts of service or contracts for services with people who chose to spend their time working abroad during the Covid pandemic and are now less keen to return to the UK. The related tax issues are both costly and complex, and they impact all sizes of business. Clients need guidance on local VAT/employment taxes, their interaction with the UK rules and on corporate tax issues too. The relaxations in the rules that many countries applied during Covid have now largely ended, as countries look to reestablish their taxing rights. The latest nuance we are looking into is the changes jurisdictions are making to their permanent establishment test: both in terms of what they consider is required for there to be a permanent establishment and the allocation of that company’s profits to that jurisdiction.
What do you know now that you wish you’d known at the start of your career?
I wish I’d known how lucky I was at each stage of my career to interact with some of the cleverest and most interesting people. Tax rules are complex and change regularly, sometimes with little warning. Changes to remove clunky rules may not be forever (marginal rates of corporation tax, a legacy from the old 30% corporation tax rate will be back in vogue from April 2023 when we move to a 25% rate but with the old marginal rate rules and associated companies tests largely dusted off and reapplied) and being able to discuss a point or riddle through an issue with a current or a former colleague can often be very useful.
Has a recent tax case caught your eye?
The case of M Group Holdings [2021] UKFTT 69 (TC) continues to be a real trap for the unwary. This was the case in which the FTT concluded that TCGA 1992 Sch 7AC para 15A enabled a hive down of a business shortly before a sale of the resulting trading subsidiary to benefit from the substantial shareholding exemption but that there had to have been a group for at least 12 months ending with the date of disposal. The judge acknowledged the arbitrary result: that the subsidiary being sold did not itself have to have been in existence for 12 months and that the group could be formed of the parent company seller and an entirely dormant, irrelevant subsidiary for 12 months with the hive down to a new company, and the condition would be met. But the judgment concluded that a single company could not form a group with itself and therefore could not benefit from the SSE if it transferred part of its trading business to a subsidiary and then sold that subsidiary. It seems bizarre to advise a client not to clear out its dormant subsidiaries but to keep one in its group just in case, especially as that does not squarely fit with a purposive interpretation of the legislation.
And finally, you might not know this about me but...
I have three daughters – identical twins and their big sister, all under 12 – and we’ve all spent the occasional hour working on the factory line in my husband’s food manufacturing company when his team are on their Christmas break and a crucial order has come in. One of the trio takes factory supervision duties very seriously and has had to be encouraged to believe that the computer mouse is a loudspeaker to avoid insulting any of the actual staff...
I am fortunate to have a very varied practice. I advise clients of different sizes across different sectors, each with its own themes and challenges. Currently, several multinational groups that we act for are in the process of rationalising their group structures. Withholding taxes, particularly on UK source interest, is a running theme for high growth companies that have issued convertible debt to investors. Residential property purchasers are grappling with the extraordinary complexity of SDLT. A few lender clients are reviewing their operations. And a high-tech client is working through VAT on a tripartite agreement with various barters. And that was just last week!
What’s a hot topic affecting clients at the moment?
We have clients who have contracts of service or contracts for services with people who chose to spend their time working abroad during the Covid pandemic and are now less keen to return to the UK. The related tax issues are both costly and complex, and they impact all sizes of business. Clients need guidance on local VAT/employment taxes, their interaction with the UK rules and on corporate tax issues too. The relaxations in the rules that many countries applied during Covid have now largely ended, as countries look to reestablish their taxing rights. The latest nuance we are looking into is the changes jurisdictions are making to their permanent establishment test: both in terms of what they consider is required for there to be a permanent establishment and the allocation of that company’s profits to that jurisdiction.
What do you know now that you wish you’d known at the start of your career?
I wish I’d known how lucky I was at each stage of my career to interact with some of the cleverest and most interesting people. Tax rules are complex and change regularly, sometimes with little warning. Changes to remove clunky rules may not be forever (marginal rates of corporation tax, a legacy from the old 30% corporation tax rate will be back in vogue from April 2023 when we move to a 25% rate but with the old marginal rate rules and associated companies tests largely dusted off and reapplied) and being able to discuss a point or riddle through an issue with a current or a former colleague can often be very useful.
Has a recent tax case caught your eye?
The case of M Group Holdings [2021] UKFTT 69 (TC) continues to be a real trap for the unwary. This was the case in which the FTT concluded that TCGA 1992 Sch 7AC para 15A enabled a hive down of a business shortly before a sale of the resulting trading subsidiary to benefit from the substantial shareholding exemption but that there had to have been a group for at least 12 months ending with the date of disposal. The judge acknowledged the arbitrary result: that the subsidiary being sold did not itself have to have been in existence for 12 months and that the group could be formed of the parent company seller and an entirely dormant, irrelevant subsidiary for 12 months with the hive down to a new company, and the condition would be met. But the judgment concluded that a single company could not form a group with itself and therefore could not benefit from the SSE if it transferred part of its trading business to a subsidiary and then sold that subsidiary. It seems bizarre to advise a client not to clear out its dormant subsidiaries but to keep one in its group just in case, especially as that does not squarely fit with a purposive interpretation of the legislation.
And finally, you might not know this about me but...
I have three daughters – identical twins and their big sister, all under 12 – and we’ve all spent the occasional hour working on the factory line in my husband’s food manufacturing company when his team are on their Christmas break and a crucial order has come in. One of the trio takes factory supervision duties very seriously and has had to be encouraged to believe that the computer mouse is a loudspeaker to avoid insulting any of the actual staff...
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