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One minute with… Gary Richards

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One minute with Gary Richards, partner, Berwin Leighton Paisner

How did you first get into tax?

Entirely by accident: not looking forward to the heavy statistical component in the Economics Tripos, I noted that the law conversion course coincided with the Cambridge Beer Festival. Tax was similarly serendipitous: having chosen tax law as part of my post-graduate course, what is now Cameron McKenna offered me a job in their newly formed tax department on qualification.

Aside from your immediate colleagues, whom in tax do you most admire and why?

Although my choice may seem historical, the answer has to be Nigel Lawson. As chancellor he was prepared to make fundamental simplifications to the UK tax system – equalisation of income tax and CGT rates, to deter avoidance and maximise revenues; CGT rebasing; and reductions in CT rates linked to correspondingly less beneficial capital allowances. All subsequent chancellors whether by design or accident seem to have added complexity – or barnacles – to the legislative edifice that is the UK tax system.

What advice would you give to someone new to the profession?

There is no alternative to reading the legislation and, even when you believe you know what it says, re-reading it. Context and published guidance are important but if HMRC disagree, could the legislation support your client’s stance? Perhaps, just as importantly, just how much is the tax concern you may have identified worth to your client and/or can it be dealt with commercially – or indeed sidestepped by using a different but commercially justifiable structure?

If you could make one change to UK tax law or practice, what would it be?

Reconsideration of the balance between interest relief and capital allowances. One of the issues with interest relief, which is hedged around with restrictions in any event – thin cap, debt cap, the distribution legislation, the arbitrage rules (but relatively soon, no longer the late paid interest rules) – is that it draws no distinction between new investment and purchase of second hand assets. In contrast, in principle allowances are available only on new investment, albeit that depending on the bargain between purchaser and seller, the relief on the original investment may be split among several successive owners of a new asset. That is not to say the current profile for relief under the allowances regimes provides the right level of incentives for new investment, nor the boundaries of what is eligible, and commercial depreciation may be a better proxy (see the OTS report referred to below).

What caught your eye in the Autumn Statement?

What caught my eye in the context of the Autumn Statement, apart from the decision to amend UK company law (as it would seem) to prevent schemes of arrangement involving cancellation schemes occurring, rather than merely providing that the court order is a stampable instrument, was the disconnect between its length (and the relative importance of the measures contained) and the comment made in the OTS competiveness of UK tax administration] review. The OTS report in relation to Ireland said ‘legislation is changed only if it has to be and much is old and familiar… [and] new legislation is kept brief.’ Meanwhile we add to the GAAR and unallowable purposes legislation, a scheme TAAR. Need I say more?

Why are politicians so fixated on mansion tax?

As presently mooted, it appears to be a tax on high value areas (principally London and the South East). Would they be so keen on it if they had to sell it throughout the UK if, say, the top 5% of houses in every constituency was subject to the tax? As we have seen with stamp duty, having a slab rather than slice system distorts the values around thresholds. Yet having a slice system to deal with the threshold issue probably means less tax will be raised and hence thresholds will be reduced: and wavering voters will probably be reminded that the ATED threshold has reduced by 75% to £500,000 in two years. Lapsing into tabloid speak [and I should stress not my views but implicitly that of its proponents] for every owner of multiple empty residences, there will be any number of asset rich, income poor, elderly persons ‘forced’ out of their ‘family home’. Housing – indeed most property development – taxes do not have a history of longevity or success. So you wonder whether the incremental costs of the IT system and delays in revenue raising pending additional appeals, balanced against the tax meant to be raised, suggests there are other existing taxes which could raise tax revenues more cheaply, quickly and predictably.

Tell us a secret.

I am probably happiest sailing (chart-based navigation in case the GPS goes down certainly clears the mind), ski-ing with my family or, unusually for me, achieving neutral buoyancy when scuba diving.

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