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I lead the Tax Risk Reputation Resolution team at Irwin Mitchell (TRRRIM). As the name suggests, our focus is tax risk. Tax legislation is constantly changing and is becoming increasingly complex: it's easy to get things wrong. The consequences for doing so are increasingly severe and can involve substantial fines, reputational damages or even criminal charges. Ideally we get involved at the planning stage to ensure risk is minimised; but where a client is under challenge already, we'll represent them to achieve the best solution. If necessary we'll advise on the exposure of a structure to challenge. We also advise on options for making a voluntary disclosure.
The team works with both companies and individuals, and clients can be UK based or investing into the UK. Many have international interests: for example, non-domicile status, offshore trusts or companies. As well as taxpayers, we advise intermediaries such as trust companies and bankers on the growing regulatory requirement to ensure their clients are tax compliant.
My introduction to tax was an inspector in the old Inland Revenue: I joined their Special Office looking at high profile cases of suspected avoidance. I learned tax was as much about ideas as about numbers, and tax law is really an attempt to define what is fair in the state’s right to take money from its citizens. Perhaps this is why it is the largest body of legislation in the world.
I moved to private practice around 2000, largely because I thought it would be more interesting working with taxpayers and advisers on how best to go forward, rather than examining actions after the event. The challenge is that before you can advise about tax, you need to understand what clients really want to achieve. Therefore the best advice requires a degree of mutual trust.
Indoors I enjoy reading, theatre and concerts. Outdoors I play tennis, walk and advise my wife on gardening.
I have published a number of articles in professional journals including Taxation, Tax Journal and Solicitors Journal. I'm regularly asked for comments in the mainline newspapers and have been interviewed on various radio and TV programmes.
“As the ‘old’ Rangers company is now in liquidation, HMRC may try to switch tax liability to the players. If that is successful, some may struggle to pay large tax bills coming years after their high-paying playing days are over. They may consider suing agents and advisers for the advice provided. Apart from those directly involved with Rangers, the case means that companies using similar tax schemes will face court challenge and the probability of large bills.
“However, the major impact may be what the Supreme Court said about how to interpret legislation when considering tax liability. One has to consider the ‘purpose’ of the legislation, not just its literal meaning. One then needs to apply that to the nature of the transactions involved. In the Rangers case, that meant looking through Trusts and loans and reclassifying the legal consequence as if the players had been paid salaries.
“For HMRC, the ability to look through legal structures and reclassify tax consequences is a holy grail of attacking tax avoidance schemes. The question of course, is what legal structures can be looked through. Rangers supporters will not be the only ones shouting that the rules of the game have been changed.”
“A bit of a damp squib of a Budget for the construction sector should not have come as a surprise to many - given the lack of any real Opposition with a plan, and an economy performing better than expected (although that depends on your expectations).
Money for old roads will please those in the North, where a quarter of respondents to the Irwin Mitchell UK Powerhouse survey in 2016 said investment in roads was the number one priority for future economic prosperity. But sadly £90m doesn’t buy much tarmac these days nor does £216m when it comes to the repair and maintenance of existing school stock.”
“The move of McDonald’s fiscal HQ to the UK from Luxembourg does not mean we should expect lots more McDonald restaurants on Britain’s high streets.
“One driver for the move will have been the planned reduction in the UK corporate tax rate. This was the intention to encourage investment into the UK by companies from around the world making Britain a business friendly tax environment, and we should be seeing more companies making a similar move to McDonalds.
“Another motive is likely to have been linked to Brexit. The EU has been investigating various tax agreements between major international companies and national governments of European countries.
“These occur when a company approaches the relevant government and explains how it proposes to treat its international tax affairs and, in particular, what amount of income is going to end up as taxable profit in the country concerned.
“This will often involve some element of what are called “transfer pricing” principles - that is whether the shifting of monies between group companies in different countries for the provision of goods or services does or does not meet the country’s tax regulations. The advantage of this up-front agreement to the company is that it provides certainty.
“However, in some recent instances the EU has ruled that that these agreements breached state aid rules. In McDonald’s case, a previous agreement with the Luxembourg authorities on the treatment of royalties was challenged by the EU.
“The legal conundrum is that it may be possible for arrangements to be within a government’s national tax legislation but deemed to be in breach of state aid rules.
“It may be that McDonalds hopes that the UK’s distancing itself from EU rules means that more reliance can be placed on assurances from the UK government.”
“Financial institutions in about 100 countries, which include banks and trusts, will be required to gather and share an unprecedented amount of information on the names of account holders, details of accounts, account activity, and balances.
“That information will be cross-referenced to information already held. Where there is any perceived mismatch, enquiries will be made. If it transpires that tax reporting has been inaccurate, and if that inaccuracy is seen to be “careless” or “deliberate”, then HMRC have the power to collect back tax, interest and to impose civil and criminal penalties.
“Given the growing complexity of tax legislation, it will not be surprising if a number of people are “caught” who are unaware of their transgressions. The burden of proof in proving innocence will fall on the taxpayer. The collection of information for CRS has now started and anyone with offshore interests should be reviewing their position with some care.”
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