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One minute with... Peter Stevens

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What’s keeping you busy at work?

Reviewing the arrangements between my clients and their contractors’ personal service companies to identify the hypothetical contract with the contractors, decide whether this would amount to an employment contract and, if so, what action to take before the IR35 rules are extended to the private sector next April.

What brought you into tax?

I wanted to keep learning, and to understand enough about tax warranties and indemnities to discuss them sensibly with the accountants. Although some lawyers are afraid of numbers, I also thought tax was primarily a legal subject, as lawyers were trained to interpret statutes, analyse cases, and prepare and present evidence. I began to think I might even have some aptitude when a well known accountant asked me to help him come up with some arguments to avoid a negligence suit if he lost a case he didn’t think he could win. I wrote an opinion that the House of Lords case the Revenue were quoting against him was distinguishable, and they quickly conceded.

Career highlights?

Acting for a famous author in a routine examination of his tax return, involving interesting questions about 'true and fair view' accounting principles for royalty receipts, which resulted in him receiving a £2m tax refund. Also, successfully claiming substantial shareholding relief when a Channel Island holding company sold the UK trading company which was its only asset.

What do you know now that you wish you’d known at the start of your career?

That everything I had learned about tax law would become irrelevant if Margaret Hodge and/or the Daily Mail decided that it would be ‘fair’ for my clients to pay more than was legally required.

Is there one lesson you wish your clients would learn?

That excellent tax planning counts for nothing if they don’t take care to ensure the supporting documentation is properly signed, dated and consistent with their account of the facts.

Has a recent tax case caught your eye?

The SDLT surcharge on additional residential properties has brought many practical problems of definition into focus. What is the difference between ‘residential property’ and a ‘dwelling’, or between being ‘suitable for use’ and ‘capable of being used’? Last January, P N Bewley Ltd v HMRC [2019] UKFTT 65 caught my eye because, after a long section entitled ‘making sense of HMRC’s submissions’, which it found very challenging, the tribunal gave some helpful guidance ‘in an effort to assist HMRC in similar cases in future’. The case also highlights that the tests are applied as at the time of completion, so photographic evidence on the day is essential. Some photographs in its bundle were difficult to examine, but the tribunal was ‘immensely helped’ by Mrs Bewley showing it the originals on her mobile phone, which also confirmed when they were taken.

Anything we should be looking out for in the next few months?

Disintermediated cross-border e-commerce is challenging legislators around the world. The UK and other governments have become impatient with the OECD’s efforts to combat tax avoidance through base erosion and profit shifting, and have introduced legislation unilaterally. The UK’s digital services tax will come into force next April, if it is not sacrificed for a post-Brexit trade deal with the US, but it will only affect a few very large companies and there is clearly more to come. In particular, when brought into force, the pithily named Income Tax (Trading and Other Income) Act 2005 (Amendments to Chapter 2A of Part 5) Regulations, SI 2019/1452, will impose an income tax charge, backdated to 6 April 2019, on businesses resident in low tax jurisdictions which, with their connected persons, jointly earn more than £10m a year (revenue or capital) from exercising intangible property rights directly or indirectly to enable, facilitate or promote the sale of goods, services or other property in, or to persons in, the UK. This will have a much bigger impact on many more businesses.

And finally, you might not know this about me but…

Having recently bought one myself, I will be interested to see how the chancellor replaces the fuel duty lost when sales of electric cars take off.

Issue: 1465
Categories: One minute with