Peter Clements is a tax partner at Freshfields LLP.
What’s keeping you busy at work?
Everything! It has been a very busy period for our transactional practice, with public and private M&A, joint ventures, reorganisations, all over the world, filling my desk. My practice is so varied, jurisdictionally, that I can often find myself negotiating an indemnity against China Public Notice 7 taxes, advising on the UK employment tax implications of the restructuring of a MEP, explaining to a client in plain English what the US tax advisers are talking about on a cross-border merger (they literally speak in Code), and working through the mind-maze that is German RETT, all on the same day.
What do you know now that you wish you’d known at the start of your career?
I am lucky enough to have been trained by some of the top tax lawyers of our (and their) generation. As a junior lawyer, that generally felt like standing at the bottom of an extremely tall mountain, looking up and wondering how on earth you could ever scale it. Step by laborious step is the answer. But one of the most valuable lessons – albeit only really understood now that I’m (slightly) higher up the mountain – is that your view counts, even when you are at base camp. Sometimes you see things more clearly when you are not in the clouds, or at least your ‘this may be a stupid question’ can prompt the cloud dweller to look afresh at something that might otherwise have seemed trite. I do my best to impart this to associates today and encourage them to speak up and challenge when they have views or questions, irrespective of experience.
If you could make one change to tax, what would it be?
As an M&A tax lawyer, the UK’s substantial shareholding exemption is a bugbear (I’m going with that rather than ‘stamp duty’ due to word limits and the sensibilities of any pre-watershed readers). I find myself all too often having to explain to a client that even though they are selling a substantial equity stake in a business that manifestly is a trading business they may have to pay some corporation tax on their gain (or jump through some additional structuring steps to get to the ‘right’ result). Perhaps because the trading business is held through a foreign entity that does not clearly have ordinary share capital. Or because for commercial reasons some of the consideration is in the form of an earn-out or other contingent consideration. For clients who are schooled in the simplicity of overseas participation exemption regimes, the UK’s substantial shareholding exemption – with all its glitches, bear traps and inconsistencies – seems unnecessarily complex and unprincipled. It shouldn’t be this hard!
What’s topical in your world?
I feel I would be letting down my colleagues if I didn’t answer ‘Pillar Two’ to this question. It has become a running joke in the team that when anybody presents on any topic, whether M&A, an internal reorganisation, a distressed debt transaction, my question will be ‘what are the Pillar Two implications’. The impact on large multinationals is pervasive and we are only now scratching the surface of the (presumably) unintended consequences that arise from bolting an entirely new tax base on top of a domestic system that has developed, with all its idiosyncrasies and government policy decisions (good and bad), over many decades.
You might not know this about me but...
For most of my childhood I wanted to be an architect. Ultimately, but reluctantly, I was put off by my art teacher’s (I would say, harsh) school report, circa 1994, and the length of study and apprenticeship required. Nowadays, I spend my spare time proposing renovation plans to my long-suffering family and ‘helping’ friends with the design for their own projects. But my teacher was right – I still can’t draw a cat sitting on a rug.
Peter Clements is a tax partner at Freshfields LLP.
What’s keeping you busy at work?
Everything! It has been a very busy period for our transactional practice, with public and private M&A, joint ventures, reorganisations, all over the world, filling my desk. My practice is so varied, jurisdictionally, that I can often find myself negotiating an indemnity against China Public Notice 7 taxes, advising on the UK employment tax implications of the restructuring of a MEP, explaining to a client in plain English what the US tax advisers are talking about on a cross-border merger (they literally speak in Code), and working through the mind-maze that is German RETT, all on the same day.
What do you know now that you wish you’d known at the start of your career?
I am lucky enough to have been trained by some of the top tax lawyers of our (and their) generation. As a junior lawyer, that generally felt like standing at the bottom of an extremely tall mountain, looking up and wondering how on earth you could ever scale it. Step by laborious step is the answer. But one of the most valuable lessons – albeit only really understood now that I’m (slightly) higher up the mountain – is that your view counts, even when you are at base camp. Sometimes you see things more clearly when you are not in the clouds, or at least your ‘this may be a stupid question’ can prompt the cloud dweller to look afresh at something that might otherwise have seemed trite. I do my best to impart this to associates today and encourage them to speak up and challenge when they have views or questions, irrespective of experience.
If you could make one change to tax, what would it be?
As an M&A tax lawyer, the UK’s substantial shareholding exemption is a bugbear (I’m going with that rather than ‘stamp duty’ due to word limits and the sensibilities of any pre-watershed readers). I find myself all too often having to explain to a client that even though they are selling a substantial equity stake in a business that manifestly is a trading business they may have to pay some corporation tax on their gain (or jump through some additional structuring steps to get to the ‘right’ result). Perhaps because the trading business is held through a foreign entity that does not clearly have ordinary share capital. Or because for commercial reasons some of the consideration is in the form of an earn-out or other contingent consideration. For clients who are schooled in the simplicity of overseas participation exemption regimes, the UK’s substantial shareholding exemption – with all its glitches, bear traps and inconsistencies – seems unnecessarily complex and unprincipled. It shouldn’t be this hard!
What’s topical in your world?
I feel I would be letting down my colleagues if I didn’t answer ‘Pillar Two’ to this question. It has become a running joke in the team that when anybody presents on any topic, whether M&A, an internal reorganisation, a distressed debt transaction, my question will be ‘what are the Pillar Two implications’. The impact on large multinationals is pervasive and we are only now scratching the surface of the (presumably) unintended consequences that arise from bolting an entirely new tax base on top of a domestic system that has developed, with all its idiosyncrasies and government policy decisions (good and bad), over many decades.
You might not know this about me but...
For most of my childhood I wanted to be an architect. Ultimately, but reluctantly, I was put off by my art teacher’s (I would say, harsh) school report, circa 1994, and the length of study and apprenticeship required. Nowadays, I spend my spare time proposing renovation plans to my long-suffering family and ‘helping’ friends with the design for their own projects. But my teacher was right – I still can’t draw a cat sitting on a rug.
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