Adviser insights: Q&A with David Kirk – Employment status tax expert

How long have you been a tax adviser David?
18 years.

How did you come to specialise in payroll taxes and employment status issues?
Because, back then, I could see that nobody else knew much about this

Where were you working at the time?
I was already running what was then a more general accountancy practice.

What are the most common mistakes you see made by non-specialists in your area of tax?
Failure to know the law

What are the most valuable issues on which you have given advice?
IR35, expenses payments, CIS, managed service companies

What differences might you expect to see in the coming year that could impact those issues?
Public sector IR35 rules being extended to the private sector

What has been your worst experience with HMRC?
Creating unnecessary trouble by not knowing the law

What has been the most rewarding thing you have done from a tax perspective?
Getting HMRC to back down from making seven-figure claims

How would you describe your attitude to tax?
Pragmatic. I expect to see truth told and the law obeyed but otherwise see no moral issues

Which aspect of tax would you nominate for a silliest tax rule award?
The IR35 rules that mean you cannot offset tax paid under one headline against tax demanded under another.

What is the funniest tax related experience you have had?
My client losing a tax tribunal case but ending up making £75,000 out of it

What is your top tax tip for general practitioners?
With HMRC enquiries: get the strategy right, know your client, and know the inspector

If you hadn’t gone into tax what would you like to be doing now?
Law

What do you enjoy doing in your spare time – away from the world of tax?
Fell walking, opera, theology and talking politics

What have you most enjoyed about your career in tax?
Writing a book. [The 4th edition of David’s book “Employment Status – a tax guide” is published by Claritax]

You can reach David via his profile here >>


Adviser insights: Q&A with Andrew Jupp : Specialist adviser to fast-growth technology-based businesses

How long have you been a tax adviser Andrew?
30 years

How did you come to specialise in fast-growth technology-based businesses?
Having previously been a PhD research scientist, I’ve always had an interest in fast-growth technology-based businesses. My career has been focused on working with such businesses and advising on the interaction between corporate and shareholder taxation.

As tax law and practice has changes, I’ve specialised in areas such as capital gains tax, IP exploitation, R&D tax credits, overseas expansion, group structuring, M&A and IPOs. I was fortunate (?) enough to be advising during the dot.com era and was involved with many IPOs on NASDAQ at what we now know were crazy valuations.

Where were you working at the time?
I started my career at GT, progressing through KPMG and then a partner at EY and National Head of Tax for a Top 10 firm, before setting up Jupp Consulting 9 years ago.

What are the most common mistakes you see made by non-specialists in your area of tax?
Not understanding the subtle complexities of tax legislation, taking things at face value, not fully understanding the client’s business and not asking the right questions.

What are the most valuable issues on which you have given advice?
R&D tax credits, Patent Box, overseas structuring.

What differences might you expect to see in the coming year that could impact those issues?
Closer alignment of income tax and CGT rates and changes to cross-border taxation.

What has been your worst experience with HMRC?
In the early days of R&D tax credits, a so-called software expert asking me what an algorithm was!

What has been the most rewarding thing you have done from a tax perspective?
Won a long-standing battle with competing tax jurisdictions over a Competent Authority claim.

How would you describe your attitude to tax?
Treat it as any other business expense; pay and claim what is fair and just and don’t be aggressive in tax planning.

Which aspect of tax would you nominate for a silliest tax rule award?
Top slicing relief (remember it?). I still to this day come out in a cold sweat when I think about it.

What is your top tax tip for general practitioners?
If in doubt, seek specialist advice. It’s a sign of strength, not a weakness.

If you hadn’t gone into tax what would you like to be doing now?
Farmer or vet.

What do you enjoy doing in your spare time – away from the world of tax?
Cooking, playing musical instruments, gardening, walking the dogs, sailing.

What other question do you wish I had asked and how would you reply?
What about you would someone never guess? Answer would be “I play a very unusual musical instrument – the piano accordion”.


Adviser insights: Q&A with Alun Oliver : Capital Allowances expert

How long have you been a tax adviser Alun?
Since April 1994 when I joined Crosher & James Quantity Surveyimg practice and about a third of my work was property tax related.

How did you come to specialise in property tax and specifically capital allowances?
I trained and qualified as a Chartered Quantity Surveyor (QS) with WS Atkins and moved to Crosher & James. At the time they were one of only a handful of QS firms specialising in Capital Allowances.

In my last QS role I spent six month negotiating with the contractor over £50K, yet only four weeks or so after starting in capital allowances I sent out my first claim report for a property investor client – saving them £3.5m… I was hooked at the opportunity to really impact clients!

What are the most common mistakes you see made by non-specialists in capital allowances?
Generally non-specialists Accountants fall into two camps

  1. Those who overclaim
  2. Those who underclaim.

Both types of mistake can have a seriously negative impact on the client and their projects.

Too often we hear and see accountants claiming too much as plant & machinery and providing only a fairly rudimentary analysis of the project expenditure. Also high levels of expenditure get categorised as Repairs (100% deduction) when actually they are improvements and should be capital – whether of not eligible for capital allowances (SBAs, PMAs, IFAs or other).

Claiming too little, is to me worse, as the client ends up paying too much tax! The reasons range from lack of awareness, apathy, to old school (and inaccurate) views that Capital Allowances are only a timing difference!

Solicitors also make mistakes here, particularly when acting on commercial property transactions. They often have a poor understanding of the New Fixtures Rules (ss.187A/B CAA2001) and too often default to a s198 election and accepting at face value the responses from the other party. Failure to properly deal with the CAs during a second-hand property transaction can result in NIL capital allowances!

What are the most valuable issues on which you have given advice?
The biggest capital allowances claim was a £600m power station where some 96% was accepted (after scrutiny & negotiation) by HMRC as Plant & Machinery with the balance as then, Industrial Buildings Allowances (IBAs).

What differences might you expect to see in the coming year that could impact those issues?
After the impact of Covid-19 there are certain sectors that will have been impacted more negatively as others. Leisure & Hospitality for example may have lower trading and thus may see losses increase and thus less requirement to seek out tax saving advice – until trade levels improve and growing profitability.

Other sectors – Logistics for example – are seeing strong demand and growth. in the medium term I feel taxes will increase as the Government has to rebuild the country’s finances after the JRS and wider C-19 support measures – but the time frame for that is not at all clear!

What has been your worst experience with HMRC?
Generally HMRC has, in my experience, been relatively fair and reasonable; although on the odd occasion there are some more pedantic enquiries.

One annoying one was a query as to why we were claiming capital allowances on air conditioning units. I simply replied asking the Tax Officer to reference the legislative or case precedent whereby they felt HVAC was disallowed; after which the claim was accepted. On balance I have had more positive feedback from HMRC than negative experiences – we regularly get compliments on the comprehensive nature and transparency of our claim reports!

How would you describe your attitude to tax?
I consider that tax is an essential part of life that enables Government to do so much. Equally tax can successfully be used to encourage or modify behaviour. There is a balance and it is important that Government sets out clear tax legislation and then applies those rules fairly and consistently so tax-payers can make commercial decisions with confidence of the tax consequences.

Which aspect of tax would you nominate for a silliest tax rule award?
Not so much a rule but the reaction of certain politicians as to WHO uses/benefits the tax reliefs – when they are working exactly as planned.

To illustrate Enterprise Zone Allowances (EZAs) or Business Premises Renovation Allowances (PBRAs) gave 100% relief to encourage deprived areas to be regenerated and be brought back into economic use – yet if these regeneration projects are funded by footballers or musicians some politicians focus on them gaining 100% tax relief on their high incomes – criticising them as tax dodgers – when they have facilitated the essential regeneration of thousands of these projects and areas across the country – as the tax relief was designed to do!

What is your top tax tip for general practitioners?
I have two tips:

  1. To recognise that few people are ‘Jack of All Trades’ and thus an independent Property Tax Specialist can add considerable value, saving time, effort, anxiety, reducing risk and saving money!
  2. Beware false economy – good advice is worth paying for – as robust, comprehensive and cost effective.

If you hadn’t gone into tax what would you like to be doing now?
Farming or an artist… but one or both of these may still feature in my next career move?!

What do you enjoy doing in your spare time – away from the world of tax?
Spending time with family and friends – often cooking (and then eating) – from cakes and biscuits through to full multi-course dinner parties!


Adviser insights: Q&A with Liz Zitzow : US taxes expert

How long have you been a tax adviser Liz?
Since 1984!
How did you come to specialise in US taxes?
I became a specialist in US international tax about twenty years ago when I moved to the UK. After three years here I was practically running the entire US division of a boutique dual US/UK company. I started my own practice after five years there.
Where were you working at the time?
US Tax and Financial Services, a practice in London and Zurich.
What are the most common mistakes you see made by non-specialists in your area of tax?
Robbing Peter to pay Paul. What’s the good of getting the lowest tax number in one country only to have a higher tax in the other one? I figure out where it’s lowest and how to get it there.
What are the most valuable issues on which you have given advice?
The disposition of assets before a major life changing event, such as divorces, moving countries, giving up citizenship, aquiring permanent residence status, starting a company, closing a trust, selling a home, etc.
What differences might you expect to see in the coming year that could impact those issues?
We’ve got a lot of people who had arrived in a country for just a few weeks only to have it turn into three months or more from Covid 19. We’re helping make sure their country of residence remains the one it would have been pre-Covid 19.
What has been your worst experience with HMRC?
The threat made to a famous author that if he wanted to object to their findings, it would be in court which would have sullied his reputation. I got them to agree that we would accept their findings only if we could compute the figures rather than use their estimate. Their estimate of how much was owed was £200K. They owed him £30K once I did the maths. Yay!
What has been the most rewarding thing you have done from a tax perspective?
Every person who came to my office crying over the worry that they would owe a lot turned around when I showed them the balance due was much smaller (often zero) and that I could get the IRS to waive all the penalties too.
How would you describe your attitude to tax?
It serves a good purpose; except for the bits that go towards military might.
Which aspect of tax would you nominate for a silliest tax rule award?
Children’s breakfast cereal is sales tax exempt in Canada if the box has a free toy. They go on define what a free toy is; the description specifies that it can’t be beer, liquor, or wine. I don’t know about you, but I’d pay sales tax to get me some of that more grown up cereal.
What is the funniest tax related experience you have had?
I did an advice session with an actor who did the voice of a robot on a sitcom. I couldn’t stop laughing as he peppered our oherwise stressful conversation with quips from the show. I like my comedian clients a lot!
What is your top tax tip for general practitioners?
Ask all-encompassing questions. It’s not, “Did you earn any interest?” It’s, “Do you have any bank or investment accounts?”
If you hadn’t gone into tax what would you like to be doing now?
I was doing day labour, waitressing, and singing in a rock band; so I suppose I’d still be in the rock scene nights with a boring day job.
What do you enjoy doing in your spare time – away from the world of tax?
I’m gardening this year. Most years I travel a lot! This year it was New England and Dublin. Next year it’s to be Washington DC and Las Vegas and the southern coast of Spain.
What other question do you wish I had asked and how would you reply?
What tips would you give an apprentice? Have a perfect resume. It’s not just spelling and grammer that have to be perfect. The fonts, the kerning, the paragraph structure, the bullet points; every teensy detail is critically identical to all the other similar bits on the CV. You don’t know what programme they’re going to be using to open your CV, so check how it looks on Windows, Macs, Android, Google, etc. Everywhere it should be the same: Perfect. You’ve had all the time in the world to get the CV right. If you can’t get something right with all the time in the world, why would a job with high pressure deadlines be interested in your CV?

Adviser insights: Q&A with Bill Stevenson: Tax investigations specialist

How long have you been a tax adviser Bill?

Since July 2006 after 41 years on the bad side (HM Revenue and Customs – Previously Inland Revenue)

Why did you move into tax work?

It was in 1965 because my first choice of the diplomatic service was not considered suitable for this school leaver.
41 years later after having set up the COP9 teams in Scotland, Wales and Northern Ireland I decided to “retire early”. Since then I have enjoyed almost every day of my retirement providing my expertise in assisting clients to deal with HMRC. This is especially under Code of Practice 9 (but in fact any tax investigation where there is a mutual willingness to engage with a client on a full disclosure basis)

How did you come to specialise in Investigations work?

For the first 10 years or so of my career I progressed “through the ranks” to Tax Inspector and then on to Fully Trained Tax Inspector with District Charge.

I always enjoyed doing tax investigation work and catching people out. Then spending almost 9 years in HMRC’s Enquiry Branch undertaking specialist and serious tax investigations (with a view to prosecuting or settling civilly with errant taxpayers) I found the work even more interesting and I was good at it.

For another 20+ years in the job I was in charge of various tax offices and enjoyed working with and seeing staff develop.

Having retired early I was almost immediately asked to help an accountant who HMRC had their sights on and managed to satisfy them that their risk was ill-conceived. The rest is history as they say. Eventually I may retire but still find that my expertise is needed and appreciated by clients when it wins the day; so we will see when that day come.

What are the most common mistakes you see in your area of tax?

  1. HMRC do not always get it right but they do in a fair percentage of cases. So don’t think that you will be smarter than the investigator or deny irregularities if you know you’ve done wrong and want to settle in the most beneficial way possible.
  2. Don’t underestimate the time it takes to properly examine and defend a client. When the COP9 letter hits your doorstep – to be signed for – you only have 60 days in which to get your ducks lined up to best effect. Failing to meet that deadline or not properly accepting or rejecting HMRC’s offer can leave you exposed to losing immunity from prosecution for matters (however serious) that you have disclosed to HMRC.
  3. Lay your cards (however serious or misguided they may be) on the table with your COP9 specialist at the earliest possible. Keeping things back can lead to a suspicion that there is more being hidden and cause the trust/relationship to deteriorate or terminate.

What do you like most about the work you do?

Apart from the great satisfaction felt when you get the client a good result. Well it has to be forensically analysing business records and financial accounts to prove that the client’s full and frank disclosure is justified and that matters are not any more serious than disclosed.

What is your top tax tip for general practitioner accountants?

General practitioners should realise that I wouldn’t probably be able to do their job as well as they do it – I don’t want to prepare accounts and do tax returns.

In the same way they can do their clients the biggest favour by recognising that it needs a certain type of person and experience to do COP9 work and they should refer such cases for specialist attention. Additionally as I have no intention of doing their type of job their bread and butter is safe in their hands.

If you hadn’t gone into tax what would you like to be doing now?

A covert hotel inspector or failing that an agricultural farmer.

What has been the most rewarding thing you have done from a tax perspective?

Achieved the right result for a client who said that comparing my service to a Big 4 Accounting firm – and he had experience of such – would be a disservice to Bill….

Which aspect of tax would you nominate for a silliest tax rule award?

HMRC’s view that it only costs £4 per week (surprisingly £6 because of Covid19) for the additional costs of working from home.

What advice would you give your younger self?

Do it all again.

What do you enjoy doing in your spare time – away form the world of tax?

In season – Creel fishing inshore and when able driving my tractor.
—-
You can reach Bill via his profile here>>>


Adviser insights: Q&A with David Hannah: Specialist in Stamp Duty Land Tax (SDLT)

Hi, David, how long have you been a tax adviser?  david hannah photo

I’ve been practicing as a chartered tax advisor since I qualified in 1988. I’m also a qualified chartered accountant.

When and why did you start to specialise in SDLT?

I started in SDLT in 2003 when it was first introduced, I founded, Cornerstone Tax in 2006 because I wanted to build a firm that could advise as a specialist on SDLT and other areas of property related taxes. SDLT has undergone more changes since its inception than any other tax. The complexities of its nuances and exceptions make it particularly interesting.

What are the most common mistakes you see in your area of tax?

In the case of SDLT, the most common error made by property purchasers is that they assume their solicitors or conveyancers are actually “advising” on their SDLT payment calculations, which they’re not, and don’t consider using a dedicated tax expert.

What is your top tax tip for general practitioner accountants?

Not to assume that all properties fall under residential or commercial classifications or that the solicitor will be dealing with it – there’s a common feeling among accountants that SDLT is a lawyers tax.

What has been the most rewarding thing you have done from a tax perspective?

One of our clients bought their first home this year and initially overpaid their SDLT bill by £9,000 due to their solicitor giving them the wrong advice, albeit unintentionally. Helping first time buyers reclaim tax that they have overpaid, at a stage in their lives when they have usually stretched themselves to their financial limit, is hugely rewarding.

How would you improve the way HMRC operates?

I’d like to see HMRC become more open with the private sector and invite increased dialogue and collaboration. The adversarial nature of HMRC’s relationship with private tax advisors creates a no-man’s land between the two sides that slows any resolution to the problems facing the UK tax system.

Many thanks David

David can be contacted via his profile page here >>>