Practice Area Focus: Corporate tax

What is corporate tax law?

Corporate tax law is a very wide area which essentially covers all of the tax issues associated with corporate transactions.  Whilst corporation tax will often be the most prominent tax that needs to be considered, a corporate tax practitioner will also need to advise on all other direct taxes that may be relevant, as well as any applicable indirect taxes (Value Added Tax being the most likely one). 

Corporate tax is an extensive and ever developing area of law.  Every corporate tax practitioner will have on their desk the handbook of tax legislation, which now runs to 11,520 pages!  Annually, following the Budget, a Finance Bill is published.  This Bill, when enacted, becomes the Finance Act for that year.  The Act updates existing provisions and introduces new detailed legislation – all of which contributes to the extensive and ever developing area of tax law.

What is the working culture like in a corporate tax team?

The working culture in a tax team is academic and inquisitive but above all friendly.  Clients tend to be sophisticated and know what they want, sometimes requiring definitive advice in tight timescales.  The work can, therefore, be intensive and require long hours.  However, the strong collegiate atmosphere and wealth of past experience to draw upon mean that a network of support always exists.

What is the typical makeup of a corporate tax lawyer’s client base?

A corporate tax lawyer’s client base will typically be made up of UK corporates.  Other clients include hedge funds, private equity vehicles, investment vehicles, financial institutions, non-UK corporates and governmental bodies.

Which other practice areas do you work most closely with?

The tax team fulfils both a support and stand-alone role.  In its support capacity it works regularly with the corporate, finance and dispute resolution groups in order to develop tax efficient structures for a full range of transactions and to deal with investigations by Her Majesty’s Revenue and Customs (HMRC).  However, the tax team often works as an independent group, providing stand-alone advice to clients, on matters unrelated to a larger transaction.

What skills make a good corporate tax lawyer?

Attention to detail and keen intellect are essential attributes of a tax lawyer.  Tax law develops constantly and keeping up to date with all the changes is a significant task in itself, therefore, a tax lawyer needs to be organised and responsive.  There are often no obvious solutions to a clients’ queries, so having a creative mind and the ability to think laterally are also helpful.

What impact has the recession had on your practice area?

The recession and resultant decrease in corporate deals has led to a slow down in transactional work.  However, stand-alone consultancy work has remained buoyant, largely owing to the huge amount of new legislation which tax practitioners are frequently asked to advise upon.  In addition, HMRC is taking a more proactive stance in its investigative role, meaning that contentious work is increasingly significant.

Which prominent tax cases has your firm been involved in?

Prominent tax cases that Slaughter and May has been successfully involved in include the House of Lords’ decisions in Deutsche Morgan Grenfell Plc v HMRC and Sempra Metals Limited v HMRC, two of the test cases in the Advance Corporation Tax group litigation.

Very recently Slaughters successfully represented Homeserve Membership Limited (Homeserve), the leading insurance intermediary for domestic emergency services, in its appeal to the High Court from the VAT and Duties Tribunal. The issue in dispute was whether the arrangement and administration fee paid to Homeserve by the policy holder was subject to insurance premium tax.  The High Court held that it was not, providing important clarification for the insurance intermediary sector.

What do you think will be the future shape of corporate tax departments?

The rising amount of legislation in the field of tax law means that tax teams are likely to experience a greater degree of specialisation.  Corporate tax practitioners will increasingly concentrate on specific areas of expertise, whilst retaining an understanding and knowledge of the legislation as a whole.

Which phrase is a corporate tax lawyer most likely to use and what does it mean?

“Chargeable gain”.  When a company or an individual sells or otherwise disposes of a capital asset, it may make a chargeable gain (on which it will be liable for tax) or an allowable loss (which it may be able to use to reduce its overall tax liability on other chargeable gains).  Corporation tax is charged on the profits of a company, where ‘profits’ is taken to mean both its income profits and chargeable gains.   Therefore a tax lawyer frequently encounters the phrase ‘chargeable gain’.