One minute with... Charles Yorke

What’s keeping you busy at work?

 

I feel very lucky to see some of the highest profile deals come across my desk and there’s never a dull moment. I tend to work on transactions together with my partners across the firm, and what keeps me busy is generally what is keeping the firm busy. There is a lot of securitisations, collateralised loan obligations (CLOs) and other repackaging of debt at the moment. 

 

I’m also involved in a fair amount of disputes work at the moment, both at the enquiry stage and before the tribunals.

 

If you could make one change to a tax law, what would it be? 

 

Let’s make that two. I think the hybrids rules are terrible – they just smack of something which seemed like a good idea conceptually, but in the real world they are almost unworkable. If you take ten entirely commercial cross-border financial transactions, two or three of them will be caught on a technicality. HMRC has to be applauded for the effort put into the guidance, but it is an impossible job to make the guidance even nearly comprehensive.

 

I would also like to see a sensible ‘reverse’ Ramsay/GAAR principle that works in the taxpayer’s favour should an inappropriate or unfair tax charge otherwise arise. It’s nothing more than giving HMRC and the courts the discretion not to apply a charge that is patently wrong.

 

Is there anything you know now that you wish you’d known at the start of your career?

 

I am a scientist by education, and started my career treating the tax law as a perfect logical system from which the correct and logical answer can always be derived.

 

It’s not – it’s all about judgment and people. Advising a client is much more about how one would expect HMRC to view an arrangement, or a judge in case it were ever to get that far. Case law precedent can (and usually will) be distinguished if the answer doesn’t seem right, and can only take the analysis so far.

 

I have a rule of thumb when advising on a difficult point. I imagine myself in a meeting room opposite HMRC during an enquiry and ask whether I would go into that meeting feeling confident that I could persuade HMRC. It focuses the mind.

 

Is there a recent case that has caught your eye? 

 

It has to be Ivey v Genting [2017] UKSC 67 – a Supreme Court decision concerning the meaning of ‘honesty’, which is the key ingredient of tax evasion. Some degree of culpability has always been required, but now an action just needs to be considered dishonest by the reasonable man or woman.

 

This could be a real problem given the limited understanding of tax by the wider public. We’ve had front page headlines calling the quoted eurobond exemption, the substantial shareholdings exemption and even using carried forward loss ‘tax avoidance’. It doesn’t take much to call more obscure tax planning ‘dishonest’. 

 

I’m hopeful that in practice this will come to nothing – but it could be used as a threat.

 

What are your views on the current state of the UK tax system?

 

The biggest change during my career has been the introduction of regimes that are intended to change behaviour without changing the substance of the tax code. The regime I come across most regularly is the code of practice on taxation for banks, but there is also DOTAS, promoters of tax avoidance schemes (POTAS), the enablers regime, the GAAR, and the list goes on…

 

It is all part of a move to make HMRC more like a regulator in the same vein as the FCA, the Prudential Regulation Authority and the Competition and Markets Authority.

 

I think there is a sense amongst our profession that tax is different and should be governed by black letter law – but we’re never going to get back to that situation and we have to work with reality.

 

Finally, you might not know this about me but… 

 

I think I’m having a mid-life crisis. I’ve taken up skiing and (horse) riding this year, and have my first rock-climbing lesson in a few weeks.