One minute with Kevin Cummings, partner-in-charge of the UK tax practice at McDermott Will & Emery
What’s keeping you busy at work?
I have just joined McDermott as part of the big transactional push in the London market and to help leverage the firm’s pre-eminent US tax brand on this side of the pond – integration is therefore my major, current pre-occupation. That and trying to help clients plan for the combined impacts of US tax reform and the OECD pillars.
Which legislation have you found most interesting during your career?
That’s an easy one for me. The government’s response to tax planning many years back by large corporates and financial services players through the enactment of novel and targeted legislation, like the risk transfer scheme rules, the group mismatch rules and the transfers of income streams legislation. I thought the legislation was really clever, in that it imported more ‘economic’ type concepts into tax legislation, meaning that ‘gains’, ‘losses’ and ‘transfers’ (all key aspects of a tax system) became more closely aligned with commercial and economic reality – rather than being pegged to a formalistic, legal or accounting interpretation.
Who have been the major influences in your tax career?
Another easy one. Patrick Mears, former head of tax at A&O and erstwhile chair of the GAAR committee – Patrick taught me that no (tax) lawyer worth their salt ever uttered the word 'problem'. And the enigmatic and inimitable Clair Quentin, former colleague, experimental photographer, perennial student and book antiquarian – from Clair I learned much about the elegance with which a drafting pen could be swiped across a page or a tidy structure conceived out of the shambolic.
What do you know now that you wish you’d known at the start of your career?
That law and tax rarely give binary answers. That there is more grey in tax than black and white, and that there’s lots to be learned from poking around in the grey. Who’d have thought there was a tussle to be had over whether something’s a loan relationship, whether interest has been paid or an expense incurred?
Are there any new rules that are causing you or your clients a problem?
I have enjoyed the journey of the multiple iterations of the anti-hybrids rules, including the fresh round of (helpful) amendments in this year’s Finance Act. Having performed mental gymnastics with multiple US-headed groups unfairly caught by the double deduction rules, it could feel almost anti-climactic to see years’ worth of toil swept away at the drop of a hat with the Act’s new ‘retrospection election’ (to deem Finance Act changes to the hybrids rules to have had effect ab initio). No doubt, the draftsman’s nod to the infamous Morpheus (red pill v blue pill) monologue: ‘you take the blue pill, you wake up in your bed and believe Chapter 9 of the hybrids rules never happened...’
Has a recent tax case caught your eye?
The FTT decision in West Burton Property Ltd is both riveting and a bit depressing in equal measure. A sound judgment and a good read for those that follow the long line of cases back to Herbert Smith on the relationship between tax law and accounting – leaving one (or me at least), however a bit concussed by the Kafka-esque treatise on ‘double entry’.
What have clients been raising recently?
There is – with good reason – a lot of chatter about the new UK asset holding company regime. Private equity and credit firms are very excited about it, and rightly so. It’s a bit of a Holy Grail moment (well, almost...) for alternative asset managers, as the regime is expected to allow fund managers to house financial assets and shares in a UK fund vehicle that will not be subject to all the usual vagaries of, and contortions demanded by, the UK tax system – hitherto, leaving the UK about as popular as a rattlesnake in a lucky dip, in terms of being a credible asset holding jurisdiction for the global funds industry.
The new, super-charged AHC regime (a souped-up version of the City’s UK securitisation company regime, but decked out in all the finery fit for the Mayfair managers) presents a UK fund vehicle that will, all going well, be taxed only on a small financing return (absent the torture of the distribution rules and the SSE, inter alia) and where investors can, to some extent, take out underlying capital returns as capital gains, receive interest gross without the unnecessary listing on the 19th Exchange of the Ruritanian Special Market and not be walloped with stamp duty on share buybacks. It’s what the UK funds industry needs and it will be a welcome antidote to the more common European structures being battered by BEPS and the Danish cases.
You might not know this about me but...
I rollerblade at weekends through the City, and I once travelled to Toronto for a skate around City Hall with blading icon, Bill Stoppard.
One minute with Kevin Cummings, partner-in-charge of the UK tax practice at McDermott Will & Emery
What’s keeping you busy at work?
I have just joined McDermott as part of the big transactional push in the London market and to help leverage the firm’s pre-eminent US tax brand on this side of the pond – integration is therefore my major, current pre-occupation. That and trying to help clients plan for the combined impacts of US tax reform and the OECD pillars.
Which legislation have you found most interesting during your career?
That’s an easy one for me. The government’s response to tax planning many years back by large corporates and financial services players through the enactment of novel and targeted legislation, like the risk transfer scheme rules, the group mismatch rules and the transfers of income streams legislation. I thought the legislation was really clever, in that it imported more ‘economic’ type concepts into tax legislation, meaning that ‘gains’, ‘losses’ and ‘transfers’ (all key aspects of a tax system) became more closely aligned with commercial and economic reality – rather than being pegged to a formalistic, legal or accounting interpretation.
Who have been the major influences in your tax career?
Another easy one. Patrick Mears, former head of tax at A&O and erstwhile chair of the GAAR committee – Patrick taught me that no (tax) lawyer worth their salt ever uttered the word 'problem'. And the enigmatic and inimitable Clair Quentin, former colleague, experimental photographer, perennial student and book antiquarian – from Clair I learned much about the elegance with which a drafting pen could be swiped across a page or a tidy structure conceived out of the shambolic.
What do you know now that you wish you’d known at the start of your career?
That law and tax rarely give binary answers. That there is more grey in tax than black and white, and that there’s lots to be learned from poking around in the grey. Who’d have thought there was a tussle to be had over whether something’s a loan relationship, whether interest has been paid or an expense incurred?
Are there any new rules that are causing you or your clients a problem?
I have enjoyed the journey of the multiple iterations of the anti-hybrids rules, including the fresh round of (helpful) amendments in this year’s Finance Act. Having performed mental gymnastics with multiple US-headed groups unfairly caught by the double deduction rules, it could feel almost anti-climactic to see years’ worth of toil swept away at the drop of a hat with the Act’s new ‘retrospection election’ (to deem Finance Act changes to the hybrids rules to have had effect ab initio). No doubt, the draftsman’s nod to the infamous Morpheus (red pill v blue pill) monologue: ‘you take the blue pill, you wake up in your bed and believe Chapter 9 of the hybrids rules never happened...’
Has a recent tax case caught your eye?
The FTT decision in West Burton Property Ltd is both riveting and a bit depressing in equal measure. A sound judgment and a good read for those that follow the long line of cases back to Herbert Smith on the relationship between tax law and accounting – leaving one (or me at least), however a bit concussed by the Kafka-esque treatise on ‘double entry’.
What have clients been raising recently?
There is – with good reason – a lot of chatter about the new UK asset holding company regime. Private equity and credit firms are very excited about it, and rightly so. It’s a bit of a Holy Grail moment (well, almost...) for alternative asset managers, as the regime is expected to allow fund managers to house financial assets and shares in a UK fund vehicle that will not be subject to all the usual vagaries of, and contortions demanded by, the UK tax system – hitherto, leaving the UK about as popular as a rattlesnake in a lucky dip, in terms of being a credible asset holding jurisdiction for the global funds industry.
The new, super-charged AHC regime (a souped-up version of the City’s UK securitisation company regime, but decked out in all the finery fit for the Mayfair managers) presents a UK fund vehicle that will, all going well, be taxed only on a small financing return (absent the torture of the distribution rules and the SSE, inter alia) and where investors can, to some extent, take out underlying capital returns as capital gains, receive interest gross without the unnecessary listing on the 19th Exchange of the Ruritanian Special Market and not be walloped with stamp duty on share buybacks. It’s what the UK funds industry needs and it will be a welcome antidote to the more common European structures being battered by BEPS and the Danish cases.
You might not know this about me but...
I rollerblade at weekends through the City, and I once travelled to Toronto for a skate around City Hall with blading icon, Bill Stoppard.
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