As the majority of our clients are investment funds, I am spending a lot of time with the new qualifying asset holding company (QAHC) rules. While the new regime simplifies several tax issues associated with UK holding companies, ensuring a company meets the eligibility criteria (and, in particular, the ownership condition) is not always straightforward. It is also still necessary to grapple with the application of other UK tax rules which are not switched off by the QAHC rules, such as the anti-hybrid rules and the controlled foreign company rules.
We also have a number of US fund manager clients looking to hire new UK staff or set up UK offices. The interaction of US and UK tax rules is often tricky and can throw up mismatches that give rise to double tax: for example, due to the different approaches to taxing carried interest (where the US taxes on the basis of a deemed liquidation each year but the UK taxes on an arising basis) and where US LLCs are used in the structure (which we know from the Anson case can make it difficult to claim foreign tax credits).
If you could make one change to tax, what would it be?
I am obviously biased, but I think everyone would benefit from having a greater understanding of the principles underpinning our tax system. I would therefore make the (hugely unpopular) change of introducing the basics of tax into the national curriculum. Tax has been in the mainstream media spotlight over recent years following the various information leaks and high profile Budget announcements, but much of the coverage is poorly informed. With a more knowledgeable voting population, the government might perhaps be discouraged from its current approach of introducing more and more complicated legislation which make for good headlines but add unnecessary complexity and costs, and very little revenue. Having said that, simpler legislation and subjecting teenagers to lessons on tax might risk bringing about the demise of the tax lawyer!
What do you know now that you wish you’d known at the start of your career?
Having recently returned from maternity leave and become a partner, it’s never been clearer to me how important it is to fill your team with people who are both great at the job and great to be around (which I am lucky to have!).
Also, how quickly you can end a conversation by telling someone you’re a tax lawyer!
What should we look out for in 2023?
I hope that HMRC will continue to refine its guidance for the QAHC regime, which bodes well for the future of UK holding companies. Meanwhile, the costs associated with Luxembourg and Irish companies are increasing due to the increased focus on substance and ATAD 1, 2 and (potentially) 3. In that regard, I am following the Irish Commissioner’s recently announced review of the use of section 110 regimes with interest.
More widely, the enactment of Pillar Two has the potential to make a marked difference to international tax planning, but it remains to be seen whether it actually meets its aim of setting a minimum global tax rate, or just becomes another layer of compliance and complexity without any teeth.
Finally, you might not know this about me but...
I have a black belt in Karate, and have dabbled in many other martial arts (most recently, MMA).
As the majority of our clients are investment funds, I am spending a lot of time with the new qualifying asset holding company (QAHC) rules. While the new regime simplifies several tax issues associated with UK holding companies, ensuring a company meets the eligibility criteria (and, in particular, the ownership condition) is not always straightforward. It is also still necessary to grapple with the application of other UK tax rules which are not switched off by the QAHC rules, such as the anti-hybrid rules and the controlled foreign company rules.
We also have a number of US fund manager clients looking to hire new UK staff or set up UK offices. The interaction of US and UK tax rules is often tricky and can throw up mismatches that give rise to double tax: for example, due to the different approaches to taxing carried interest (where the US taxes on the basis of a deemed liquidation each year but the UK taxes on an arising basis) and where US LLCs are used in the structure (which we know from the Anson case can make it difficult to claim foreign tax credits).
If you could make one change to tax, what would it be?
I am obviously biased, but I think everyone would benefit from having a greater understanding of the principles underpinning our tax system. I would therefore make the (hugely unpopular) change of introducing the basics of tax into the national curriculum. Tax has been in the mainstream media spotlight over recent years following the various information leaks and high profile Budget announcements, but much of the coverage is poorly informed. With a more knowledgeable voting population, the government might perhaps be discouraged from its current approach of introducing more and more complicated legislation which make for good headlines but add unnecessary complexity and costs, and very little revenue. Having said that, simpler legislation and subjecting teenagers to lessons on tax might risk bringing about the demise of the tax lawyer!
What do you know now that you wish you’d known at the start of your career?
Having recently returned from maternity leave and become a partner, it’s never been clearer to me how important it is to fill your team with people who are both great at the job and great to be around (which I am lucky to have!).
Also, how quickly you can end a conversation by telling someone you’re a tax lawyer!
What should we look out for in 2023?
I hope that HMRC will continue to refine its guidance for the QAHC regime, which bodes well for the future of UK holding companies. Meanwhile, the costs associated with Luxembourg and Irish companies are increasing due to the increased focus on substance and ATAD 1, 2 and (potentially) 3. In that regard, I am following the Irish Commissioner’s recently announced review of the use of section 110 regimes with interest.
More widely, the enactment of Pillar Two has the potential to make a marked difference to international tax planning, but it remains to be seen whether it actually meets its aim of setting a minimum global tax rate, or just becomes another layer of compliance and complexity without any teeth.
Finally, you might not know this about me but...
I have a black belt in Karate, and have dabbled in many other martial arts (most recently, MMA).
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