Some interesting cases on domicile, two very interesting cross-border probates, and activity on offshore trusts – UK residential property holding structures are still emerging as the IHT changes bite with ten year anniversary charges, the taking on of new structures can provide challenges for trustees on historic information, and the usual range of setting up structures, restructuring and winding up. There also seems to be a degree of interest in moving to the UK and investing here.
What do you know now that you wish you’d known at the start of your career?
I wish that I had had an inkling of how tax legislation would proliferate – the size of Tolley’s Yellow and Orange Tax Handbooks are testament to that. I have seen taxes come and go, most recently ATED related CGT. And I wish that I had known how important the regulatory side would become. But that said, being a lawyer is about knowledge and experience. In the private client field, the experience of working with different families and trustees could not just have been imparted at the outset.
What tax changes do you think might be on the horizon?
The Budgetwill now be not until next year, but eventually the chancellor will have to work out how to payfor the financial assistance given in response to the Covid-19 pandemic. The question is whether he will also make significant policy changes. The Office of Tax Simplification, having looked at inheritance tax last year, has been charged with looking at CGT this year. There is a critical current about inherited, as opposed to earned, wealth, and there is a project underway looking at the possible introduction of a wealth tax.
The problem with piecemeal and reactive change is that it can lead to a lack of coherence in tax policy. We saw that with the changes to residential property in the UK held through offshore structures where the changes took place over a number of years with a significant amount of legislation. With IHT and CGT clearly being considered, it would be good to know that the UK will try to achieve some overall consistent tax policy in this area.
On corporation tax and VAT, the effect of Brexit remains to be seen. The introduction of a corporation tax rate of 17% was deferred in April this year, and the question will be whether it can be afforded with the double impact of a pandemic and Brexit.
Has a recent case caught your eye?
For some time, I’ve followed the progress of The Trustees of the P Panayi Accumulation and Maintenance Trusts 1-4 v HMRC, as it has a bearing on some matters I am dealing with. Readers will know that it concerns the exit charge for trusts becoming non-UK resident which arises under TCGA 1992 s 80. In Panayi, a majority of new trustees were appointed who were Cypriot resident. The question was whether this charge is compatible with the fundamental freedoms provided by EU law. The matter was referred by the FTT to the CJEU (Case C-646/15), which ruled that the lack of deferral in the payment of the tax was contrary to the freedom of establishment. The FTT ([2019] UKFTT 622) then found its way to a conforming interpretation which allowed a deferral of the exit charge so it could be paid in instalments, and the concept of a
CGT exit charge payment plan was included in FA 2019.
And finally, you might not know this about me but…
History remains one of my great interests outside work. I did research in early fifteen century English history looking at military expenditure between 1422 and 1435 – looking at how the Crown paid for that probably unwittingly fuelled my interest in tax!’
Some interesting cases on domicile, two very interesting cross-border probates, and activity on offshore trusts – UK residential property holding structures are still emerging as the IHT changes bite with ten year anniversary charges, the taking on of new structures can provide challenges for trustees on historic information, and the usual range of setting up structures, restructuring and winding up. There also seems to be a degree of interest in moving to the UK and investing here.
What do you know now that you wish you’d known at the start of your career?
I wish that I had had an inkling of how tax legislation would proliferate – the size of Tolley’s Yellow and Orange Tax Handbooks are testament to that. I have seen taxes come and go, most recently ATED related CGT. And I wish that I had known how important the regulatory side would become. But that said, being a lawyer is about knowledge and experience. In the private client field, the experience of working with different families and trustees could not just have been imparted at the outset.
What tax changes do you think might be on the horizon?
The Budgetwill now be not until next year, but eventually the chancellor will have to work out how to payfor the financial assistance given in response to the Covid-19 pandemic. The question is whether he will also make significant policy changes. The Office of Tax Simplification, having looked at inheritance tax last year, has been charged with looking at CGT this year. There is a critical current about inherited, as opposed to earned, wealth, and there is a project underway looking at the possible introduction of a wealth tax.
The problem with piecemeal and reactive change is that it can lead to a lack of coherence in tax policy. We saw that with the changes to residential property in the UK held through offshore structures where the changes took place over a number of years with a significant amount of legislation. With IHT and CGT clearly being considered, it would be good to know that the UK will try to achieve some overall consistent tax policy in this area.
On corporation tax and VAT, the effect of Brexit remains to be seen. The introduction of a corporation tax rate of 17% was deferred in April this year, and the question will be whether it can be afforded with the double impact of a pandemic and Brexit.
Has a recent case caught your eye?
For some time, I’ve followed the progress of The Trustees of the P Panayi Accumulation and Maintenance Trusts 1-4 v HMRC, as it has a bearing on some matters I am dealing with. Readers will know that it concerns the exit charge for trusts becoming non-UK resident which arises under TCGA 1992 s 80. In Panayi, a majority of new trustees were appointed who were Cypriot resident. The question was whether this charge is compatible with the fundamental freedoms provided by EU law. The matter was referred by the FTT to the CJEU (Case C-646/15), which ruled that the lack of deferral in the payment of the tax was contrary to the freedom of establishment. The FTT ([2019] UKFTT 622) then found its way to a conforming interpretation which allowed a deferral of the exit charge so it could be paid in instalments, and the concept of a
CGT exit charge payment plan was included in FA 2019.
And finally, you might not know this about me but…
History remains one of my great interests outside work. I did research in early fifteen century English history looking at military expenditure between 1422 and 1435 – looking at how the Crown paid for that probably unwittingly fuelled my interest in tax!’
.jpg?sfvrsn=335a554c_0 "300 x 250 (MPU)")