One minute with Tim Gummer, Practice Group Head of the Global Tax Team at Ashurst Perkins Coie
What’s keeping you busy at work?
Particularly busy areas include mid-market private equity M&A deals (driven by a significant number of recent lateral corporate private equity partner hires in London); pan-European real estate and infrastructure ‘platform’ joint ventures (e.g. with Asian and North American capital); and recruitment (e.g. to meet increased demand for tax advice, including following Ashurst’s recent combination with Perkins Coie).
What do you know now that you wish you’d known at the start of your career?
The benefits of working closely with tax controversy (i.e. tax audit and tax litigation) specialists in a transactional (i.e. non-litigation) context. Their help is invaluable. We now encourage all of our junior tax lawyers to obtain a mix of transactional and contentious tax experience at an early stage of their career.
If you could make one change to tax, what would it be?
Extending the UK REIT regime to apply to energy and infrastructure investments as well as UK property. This would help unlock more investment from a broad range of domestic and international capital to give a much-needed boost to infrastructure investment in the UK.
While any legislative changes would need to address a number of nuances, there are many similarities between infrastructure and property investments, including projects requiring very significant capital expenditure, long-term and (generally) stable cashflows, and significant amounts of international capital seeking investment opportunities from long-term passive income.
Any new trends you’re seeing in tax?
Three stand out.
First, our funds tax team are engaged in increasingly complicated management incentive plan (MIP) arrangements both within and outside a transactional context, including navigating the recent UK carried interest reforms.
Second, we are seeing greater use of English law-governed, UK-style tax covenants in international M&A, including for emerging markets deals with little UK nexus beyond the governing law. That can be extremely helpful in allocating residual or known tax risks in emerging market transactions. This can, for example, (i) clearly allocate non-resident CGT and withholding tax risks (e.g. in natural resources deals) and (ii) address practical tax administration issues (e.g. issues that are better suited to more detailed tax covenant style drafting than ‘shorthand’ provisions added in a screaming rush to a sale and purchase agreement at the end of a deal).
Third, there is an increased trend for huge information requests from HMRC and other tax authorities, particularly in an unallowable purpose and transfer pricing context. These information requests are so vast in scale that our tax controversy team has had to design bespoke solutions to formulate responses. Quite literally, AI is the only solution to reviewing such huge amounts of data!
Are there any tax issues causing a particular problem in practice?
The current, and ongoing, HMRC review in relation to HMRC’s current approach to late filed DTTP2 forms in a UK withholding tax context is causing headaches in many M&A deals and financings. The issue arises where a lender would have been entitled to gross payment in respect of payments of UK source interest but the ‘only’ wrinkle is the late filing of a DTTP2 form by the relevant borrower. Obtaining clarity as to HMRC’s current position as soon as possible would be hugely helpful.
One minute with Tim Gummer, Practice Group Head of the Global Tax Team at Ashurst Perkins Coie
What’s keeping you busy at work?
Particularly busy areas include mid-market private equity M&A deals (driven by a significant number of recent lateral corporate private equity partner hires in London); pan-European real estate and infrastructure ‘platform’ joint ventures (e.g. with Asian and North American capital); and recruitment (e.g. to meet increased demand for tax advice, including following Ashurst’s recent combination with Perkins Coie).
What do you know now that you wish you’d known at the start of your career?
The benefits of working closely with tax controversy (i.e. tax audit and tax litigation) specialists in a transactional (i.e. non-litigation) context. Their help is invaluable. We now encourage all of our junior tax lawyers to obtain a mix of transactional and contentious tax experience at an early stage of their career.
If you could make one change to tax, what would it be?
Extending the UK REIT regime to apply to energy and infrastructure investments as well as UK property. This would help unlock more investment from a broad range of domestic and international capital to give a much-needed boost to infrastructure investment in the UK.
While any legislative changes would need to address a number of nuances, there are many similarities between infrastructure and property investments, including projects requiring very significant capital expenditure, long-term and (generally) stable cashflows, and significant amounts of international capital seeking investment opportunities from long-term passive income.
Any new trends you’re seeing in tax?
Three stand out.
First, our funds tax team are engaged in increasingly complicated management incentive plan (MIP) arrangements both within and outside a transactional context, including navigating the recent UK carried interest reforms.
Second, we are seeing greater use of English law-governed, UK-style tax covenants in international M&A, including for emerging markets deals with little UK nexus beyond the governing law. That can be extremely helpful in allocating residual or known tax risks in emerging market transactions. This can, for example, (i) clearly allocate non-resident CGT and withholding tax risks (e.g. in natural resources deals) and (ii) address practical tax administration issues (e.g. issues that are better suited to more detailed tax covenant style drafting than ‘shorthand’ provisions added in a screaming rush to a sale and purchase agreement at the end of a deal).
Third, there is an increased trend for huge information requests from HMRC and other tax authorities, particularly in an unallowable purpose and transfer pricing context. These information requests are so vast in scale that our tax controversy team has had to design bespoke solutions to formulate responses. Quite literally, AI is the only solution to reviewing such huge amounts of data!
Are there any tax issues causing a particular problem in practice?
The current, and ongoing, HMRC review in relation to HMRC’s current approach to late filed DTTP2 forms in a UK withholding tax context is causing headaches in many M&A deals and financings. The issue arises where a lender would have been entitled to gross payment in respect of payments of UK source interest but the ‘only’ wrinkle is the late filing of a DTTP2 form by the relevant borrower. Obtaining clarity as to HMRC’s current position as soon as possible would be hugely helpful.
2e57498c-0da6-4646-a5fb-7a7570a14975.tmb-editorspic.jpg?sfvrsn=3909c9d0_1)
