We are fortunate to have a very broad practice at Fried Frank. In addition to the usual diet of fund formation, M&A and finance transactions, I have been assisting a client with an HMRC enquiry and have been working on the sale of a distressed business with a novel approach to the restructuring and sale process which made the allocation of tax risk particularly involved.
I have also been advising our asset management clients on a variety of secondaries, continuation fund and ‘stakes’ transactions (the latter broadly involving investors buying a stake in the asset manager’s cash flows rather than the underlying funds). Both the European continuation fund and UK ‘stakes’ markets have been very active of late, the former because managers are either struggling to realise full value for assets via more traditional routes or want to get liquidity for and/or hold onto outperforming assets, and the latter possibly being a consequence of Labour having the taxation of carried interest in their crosshairs.
What do you know now that you wish you’d known at the start of your career?
If something doesn’t make sense to you as the tax lawyer, then chances are that it’s not because you’re being dim but rather that nobody has yet thought it through at the level of detail required to understand and analyse it from a tax perspective. In any event, you’ll need to understand the issues or facts to analyse them properly, so it’s better to have the confidence to ask questions up front rather than try to work the facts out on your own afterwards.
The other bit of advice I was grateful to receive early on was that you should never feel embarrassed to take a point away and consider it, rather than give an on-the-spot answer. Clients and colleagues are typically understanding, but even when they’re piling on the pressure it is worth remembering that a considered, accurate and commercially sensible answer will ultimately be better for you and your client (and the firm’s insurance premiums) than a swift one.
If you could make one change to tax, what would it be?
Each time I have to look at the hybrid mismatch rules I am struck by how painful (and lengthy) they are to navigate and, even after amendments, how poorly they deal with certain aspects, for example where any hybridity is incidental to a mismatch or with the search for dual-inclusion income. Given we have a corporate interest restriction, transfer pricing rules and myriad other anti-avoidance rules restricting deductions for payments of interest the length of the hybrids rules and associated guidance feels disproportionate. So it would be nice to simplify those. Or alternatively to dispense with the practice of rushing to enact legislation and promising in consultation responses to paper over the cracks with guidance.
What issues have been clients been raising recently?
Many of our asset management clients have embraced QAHCs: mainly to hold UK assets, but also as an alternative to holding companies in other European jurisdictions, as clients often have the presence in London to give their QAHC substance. But given the utility of a QAHC and the presence of London expertise, clients often hope to do more with them than the legislation necessarily envisages, meaning we’ve been having to consider the technical narrowness of the activity and investment conditions more often and more closely than I had originally expected.
And finally, you might not know this about me but...
I am (or was once) an enthusiastic singer with choral scholarships to school and my college at university (and a long time ago I had a treble solo part at the Royal Albert Hall). Until relatively recently and given a desperate enough organist/choral director I’d occasionally stand-in as a tenor for the odd wedding or service, but these days singing involves fewer motets and more nursery rhymes with my children.
We are fortunate to have a very broad practice at Fried Frank. In addition to the usual diet of fund formation, M&A and finance transactions, I have been assisting a client with an HMRC enquiry and have been working on the sale of a distressed business with a novel approach to the restructuring and sale process which made the allocation of tax risk particularly involved.
I have also been advising our asset management clients on a variety of secondaries, continuation fund and ‘stakes’ transactions (the latter broadly involving investors buying a stake in the asset manager’s cash flows rather than the underlying funds). Both the European continuation fund and UK ‘stakes’ markets have been very active of late, the former because managers are either struggling to realise full value for assets via more traditional routes or want to get liquidity for and/or hold onto outperforming assets, and the latter possibly being a consequence of Labour having the taxation of carried interest in their crosshairs.
What do you know now that you wish you’d known at the start of your career?
If something doesn’t make sense to you as the tax lawyer, then chances are that it’s not because you’re being dim but rather that nobody has yet thought it through at the level of detail required to understand and analyse it from a tax perspective. In any event, you’ll need to understand the issues or facts to analyse them properly, so it’s better to have the confidence to ask questions up front rather than try to work the facts out on your own afterwards.
The other bit of advice I was grateful to receive early on was that you should never feel embarrassed to take a point away and consider it, rather than give an on-the-spot answer. Clients and colleagues are typically understanding, but even when they’re piling on the pressure it is worth remembering that a considered, accurate and commercially sensible answer will ultimately be better for you and your client (and the firm’s insurance premiums) than a swift one.
If you could make one change to tax, what would it be?
Each time I have to look at the hybrid mismatch rules I am struck by how painful (and lengthy) they are to navigate and, even after amendments, how poorly they deal with certain aspects, for example where any hybridity is incidental to a mismatch or with the search for dual-inclusion income. Given we have a corporate interest restriction, transfer pricing rules and myriad other anti-avoidance rules restricting deductions for payments of interest the length of the hybrids rules and associated guidance feels disproportionate. So it would be nice to simplify those. Or alternatively to dispense with the practice of rushing to enact legislation and promising in consultation responses to paper over the cracks with guidance.
What issues have been clients been raising recently?
Many of our asset management clients have embraced QAHCs: mainly to hold UK assets, but also as an alternative to holding companies in other European jurisdictions, as clients often have the presence in London to give their QAHC substance. But given the utility of a QAHC and the presence of London expertise, clients often hope to do more with them than the legislation necessarily envisages, meaning we’ve been having to consider the technical narrowness of the activity and investment conditions more often and more closely than I had originally expected.
And finally, you might not know this about me but...
I am (or was once) an enthusiastic singer with choral scholarships to school and my college at university (and a long time ago I had a treble solo part at the Royal Albert Hall). Until relatively recently and given a desperate enough organist/choral director I’d occasionally stand-in as a tenor for the odd wedding or service, but these days singing involves fewer motets and more nursery rhymes with my children.
