Our Tax Views
Happy Anniversary to Us! 14th February 2012
Successful Private Client Ladies Event with Celebrity Jeweller Stephen Einhorn
Georgiana Head and Alison Tait with Stephen Einhorn
Thanks to Stephen Einhorn for coming up from London to entertain the private client ladies of the North. Stephen is a highly regarded jeweller who client’s include Johnny Depp, Charlize Theron and Eva Green. He has worked on films including ‘Snow White and the Huntsman’ and ‘Dark Shadows’ and TV series including ‘True Blood’. At a lunchtime event at Brasserie 44 in Leeds, Stephen showed us a wide range of his work and talked us through his career. A truly glittering event where we got to try on some amazing jewellery (diamonds, darling!). Thanks to Jemi Hargreaves for her help organising.
One minute with…Simon Nuttall of Bodycote Plc for Tax Journal
This week Georgiana Head interviews Simon Nuttall of Bodycote Plc for Tax Journal:
What difference do you see between working in practice or in industry?
In a lot of ways it is similar, albeit for just one demanding client (and minus the time sheets of course). I think the breadth of tax issues that have to be dealt with at a good working level is far wider in industry than one individual would experience in practice, but practice offers greater depth of knowledge in specific taxes.
What is the biggest problem facing tax directors today?
Lack of time, and increasing complexity. The level of tax reporting has increased significantly in recent years which reduces the time available to provide tax advice and business support.
Name a recent piece of work of which you are most proud
Getting 30 Finance Controllers from around the world to understand tax accounting in just three hours and seeing them actually enjoy it too. The seemingly impossible achieved!
Where do you stand on the introduction of a GAAR?
A GAAR strikes me as a cop out against specific rules, and would therefore create more uncertainty. Adam Smith was correct in saying that one of the canons of a good tax is certainty, and I don’t believe a GAAR would provide that. The tax disclosure rules have significantly reduced tax ‘mischief’ because the Treasury $nd out about loopholes faster and are able to block them sooner. Adding to uncertainty will simply slow the system down, and make the UK a less attractive place.
If you could make one change to UK tax law, what would it be?
Significantly lower corporate tax (how about 5%)? That would bring in a huge amount of investment, additional jobs, and a significant addition to payroll taxes for the Exchequer. It would free up a lot of HMRC’s time spent on corporate tax scrutiny, when the bulk of the tax take relates to PAYE and NI.
Tax competitiveness – are we moving in the right direction?
A tentative yes – I think the political will is there, but the dra!ing detail remains to be seen. The probability of a significant number of the FTSE 350 rebasing themselves overseas was very high two years ago, but recent announcements appear to have stemmed the tide.
What has HMRC got right?
CFC reform, and tentative acceptance that not all business transactions are tax motivated.
What has HMRC got wrong?
Calling taxpayers ‘customers’ – a real customer has a choice. I also don’t think HMRC invests enough in its people, and as a result it doesn’t reach its full potential.
What are your views on the 50% income tax rate?
The 50% tax rate is purely a political tax and perhaps achieves a political aim as a result, but it does dent the attractiveness of the UK to investors and is at a level where the people impacted by it, start to look at ways around it. It should be removed as soon as possible, but that will be driven by politics I fear.
If you weren’t a tax director, what would you be?
A builder. I like building and creating things, it gives me a sense of satisfaction, and a completely different set of problem-solving skills.
One minute with…Stephen Hoyle, Head of Tax at DLA Piper
This week Georgiana Head interviews Stephen Hoyle, Head of Tax at DLA Piper, for Tax Journal:
“Name a recent piece of work of which you are most proud?
It is a transaction; the acquisition of HSBC Rail by an infrastructure consortium in late 2010. It was complex, with some very stimulating tax points. Indeed, so much of the taxation arising around leasing companies can be challenging.
Where do you stand on the introduction of a GAAR?
I have strong views on this. Graham Aaronson QC is the leading tax advocate of his generation – but there is a trap that he has to avoid – a trap into which barristers can fall – which is thinking that a problem can be solved by a turn of phrase. A ‘turn of phrase’ can work well in an opinion or in argument, but be much less successful in a judgement. We have a precedent for this with MacNiven v Westmoreland Investments Ltd. Lord Hoffmann’s attempt to define the limits of Ramsay using a distinction between legal concepts and commercial concepts took us nowhere. In my opinion there is no simple formulation of words which could claim to answer this complex question without falling into a ‘Hoffmann’ trap.
If you could make one change to UK tax law, what would it be?
I actually wouldn’t invest any more money in changing UK tax legislation. Instead I would invest money in attracting really good people into HMRC. I’d like a return to the days when you dealt with someone from the Revenue on a concept like ‘the meaning of distribution’ and you discovered that their expert was a really clever guy with a PHD in potatoes. So I would like to see the return of more of their intellectuals. I imagined them to be quietly subversive.
Do you think chartered accountants should get the equivalent of legal privilege?
Yes, I do. I was a partner in a Big 4 accountancy firm for a while after I left banking, impressed by the quality of my colleagues and by the level to which their work was internally audited. Legal privilege rests on the historical role of lawyers and the regulation of the profession. However, chartered accountants are also highly regulated, I think most lawyers would be amazed by the scope of the Big 4 ‘Total Quality Reviews’ where every element of your work including when you signed engagement letters, what notes you have on file to back up advice you gave and so on is audited.
Was the bank payroll tax fair?
Alistair Darling predicted bank payroll tax would raise £500m and he thought it would change the banks’ bonus policies. The politicians seemed totally unprepared for what happened and to me this showed a lack of understanding of modern banking. I’m sure the politicians wanted to raise a token amount and change the bank’s behaviour but they hadn’t factored in that most non-UK banks’ bonus pools are global and not fixed nationally. Many of the foreign banks mutualised the cost of the payroll tax so people in Hong Kong and Singapore, for example ended up sharing the cost, together with shareholders to varying degrees. He missed the global perspective. This and the 50% income tax rate have made the City less competitive a location and made us enemies. For a while the City was the place to be. It isn’t any more. International bankers have been leaving the UK because they can do the same international work in another location but with a lower personal tax burden.
Today I spotted Jason Donovon on way to a client event, then went to the opening of the Lucy in Disguise Collection at Harvey Nichols and met Lily Allen and her sister Sarah Owen!