You are head of stamp taxes at FTI Consulting and chairman of the Stamp Taxes Practitioners Group (STPG). What big development should we be looking out for in 2016?
For anyone involved in the residential housing market (which means all of us), the successive changes in SDLT add to the complexity of the tax and make it more important to check which reliefs and partial reliefs may apply. The extra 3% on purchases of additional homes announced in the Autumn Statement is under consultation in relation to the policy details. There are material risks that this measure could misfire.
What are the risks and how is the consultation proceeding?
HM Treasury and HMRC are running face to face meetings with advisers and industry representatives and formal responses are being sought to the consultative document. The willingness to consult on the policy details, as well as the tax implementation, is to be welcomed and the officials involved are clearly open to discussion. The aim of the policy seems to be to tip the economic balance slightly in favour of owner occupiers and against buy to let investors, who may be directly competing with them for the same finance and housing stock. The risk is that larger scale institutional investment, which generally taps different sources of finance and tends to increase stock through new builds and conversions, might find itself hit. Also, owner occupiers who are unable to synchronise a sale and purchase of a main home may have to pay the 3% upfront and claim it back from HMRC later. Addressing both of these concerns is vital if the measure is not to have an impact counter to its policy intention to increase owner occupation.
Looking back on your career to date, what key lesson have you learned?
I have seen the importance of developing transferable skills. My first 25 years of employment were as a government statistician, where I advised many different groups in a number of departments. For each project, I had to communicate with the client to identify their problems so that my analytical and problem solving skills could be applied to help them. I transferred, within the then Inland Revenue, from statistical analysis of Budget measures to being a policy adviser to Treasury ministers. I subsequently moved to the private sector to give tax advice in 2001 and joined FTI in 2013. The essential skills as a tax adviser are the same as those I needed in the earlier jobs: to understand the client’s problems; to use technical and analytical skills to seek solutions; and then to communicate with them and the tax authorities to get a good result.
What sets the tax team at FTI Consulting apart from other advisory firms?
We have advisers of ‘big 4’ quality but we are completely independent from audit work. FTI does no statutory audit work anywhere in the world and the lack of potential conflicts is very refreshing. The UK practice is flexible to clients’ needs and is growing very quickly.
What caught your eye in the Finance Bill?
Draft legislation for the Finance Bill tweaks the reliefs against the 15% higher rate for some corporate purchases – and this is to be welcomed. But the rules for the extra 3% on the purchase of additional homes have yet to be formulated.
What’s in your in-tray?
A lot of material relating to government consultations on the 3% extra SDLT on additional homes and a less formal sequence of discussions with HMRC on the definitions of residential property for tax purposes. The latter arises from ongoing lobbying by STPG and the CIOT about the difficulties and uncertainties caused by the plethora of different definitions for different tax purposes. This could result in proposals to make changes to legislation and at the very least we want to see more consistency and completeness in HMRC published guidance. The definitions within SDLT have become more important, as the rates applicable to residential property have increased relative to those which apply to non-residential property.
If you could make one change to UK tax law or practice, what would it be?
I’d like HMRC case workers to follow more closely the spirit (and sometimes the letter) of the administrative rules. I appreciate that they may have difficulties in getting some taxpayers to co-operate. But they should raise enquiries properly within the statutory deadlines, rather than relying on discovery powers (and the lenient views that the courts take) when they are late. And they should issue notices of enquiry labelled as such and issued to the correct taxpayer, rather than relying on the courts to treat other correspondence as amounting to the required formalities. I am not suggesting that HMRC always gets its own way or that there is an institutional intention to push the rules, but it grates on me when I come across problems of this nature.
Tell us a secret.
Well, it is a pretty open secret to those who know me, but a passion that I have outside tax relates to dogs. My wife and I share our home with a number of canines – currently three Cavalier King Charles Spaniels. We take a close interest in animal welfare charities and support dog rescue organisations. The cavaliers have all been re-homed to us and we do our best to provide a safe and loving environment to counteract the traumas they have previously faced. The affection we get in return is humbling.
You are head of stamp taxes at FTI Consulting and chairman of the Stamp Taxes Practitioners Group (STPG). What big development should we be looking out for in 2016?
For anyone involved in the residential housing market (which means all of us), the successive changes in SDLT add to the complexity of the tax and make it more important to check which reliefs and partial reliefs may apply. The extra 3% on purchases of additional homes announced in the Autumn Statement is under consultation in relation to the policy details. There are material risks that this measure could misfire.
What are the risks and how is the consultation proceeding?
HM Treasury and HMRC are running face to face meetings with advisers and industry representatives and formal responses are being sought to the consultative document. The willingness to consult on the policy details, as well as the tax implementation, is to be welcomed and the officials involved are clearly open to discussion. The aim of the policy seems to be to tip the economic balance slightly in favour of owner occupiers and against buy to let investors, who may be directly competing with them for the same finance and housing stock. The risk is that larger scale institutional investment, which generally taps different sources of finance and tends to increase stock through new builds and conversions, might find itself hit. Also, owner occupiers who are unable to synchronise a sale and purchase of a main home may have to pay the 3% upfront and claim it back from HMRC later. Addressing both of these concerns is vital if the measure is not to have an impact counter to its policy intention to increase owner occupation.
Looking back on your career to date, what key lesson have you learned?
I have seen the importance of developing transferable skills. My first 25 years of employment were as a government statistician, where I advised many different groups in a number of departments. For each project, I had to communicate with the client to identify their problems so that my analytical and problem solving skills could be applied to help them. I transferred, within the then Inland Revenue, from statistical analysis of Budget measures to being a policy adviser to Treasury ministers. I subsequently moved to the private sector to give tax advice in 2001 and joined FTI in 2013. The essential skills as a tax adviser are the same as those I needed in the earlier jobs: to understand the client’s problems; to use technical and analytical skills to seek solutions; and then to communicate with them and the tax authorities to get a good result.
What sets the tax team at FTI Consulting apart from other advisory firms?
We have advisers of ‘big 4’ quality but we are completely independent from audit work. FTI does no statutory audit work anywhere in the world and the lack of potential conflicts is very refreshing. The UK practice is flexible to clients’ needs and is growing very quickly.
What caught your eye in the Finance Bill?
Draft legislation for the Finance Bill tweaks the reliefs against the 15% higher rate for some corporate purchases – and this is to be welcomed. But the rules for the extra 3% on the purchase of additional homes have yet to be formulated.
What’s in your in-tray?
A lot of material relating to government consultations on the 3% extra SDLT on additional homes and a less formal sequence of discussions with HMRC on the definitions of residential property for tax purposes. The latter arises from ongoing lobbying by STPG and the CIOT about the difficulties and uncertainties caused by the plethora of different definitions for different tax purposes. This could result in proposals to make changes to legislation and at the very least we want to see more consistency and completeness in HMRC published guidance. The definitions within SDLT have become more important, as the rates applicable to residential property have increased relative to those which apply to non-residential property.
If you could make one change to UK tax law or practice, what would it be?
I’d like HMRC case workers to follow more closely the spirit (and sometimes the letter) of the administrative rules. I appreciate that they may have difficulties in getting some taxpayers to co-operate. But they should raise enquiries properly within the statutory deadlines, rather than relying on discovery powers (and the lenient views that the courts take) when they are late. And they should issue notices of enquiry labelled as such and issued to the correct taxpayer, rather than relying on the courts to treat other correspondence as amounting to the required formalities. I am not suggesting that HMRC always gets its own way or that there is an institutional intention to push the rules, but it grates on me when I come across problems of this nature.
Tell us a secret.
Well, it is a pretty open secret to those who know me, but a passion that I have outside tax relates to dogs. My wife and I share our home with a number of canines – currently three Cavalier King Charles Spaniels. We take a close interest in animal welfare charities and support dog rescue organisations. The cavaliers have all been re-homed to us and we do our best to provide a safe and loving environment to counteract the traumas they have previously faced. The affection we get in return is humbling.
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