CommitteeReports


Training Committee There is a hiatus in the work of the Committee as we wait for the recommendations of the Legal Education & Training Review (“the Review”) to be published.


The researchers leading the Review are in the final stage of their work - preparing their recommendations based on the evidence they have gathered over the period of the Review.


They are expected to deliver their recommendations to the funding regulators (the SRA, the Bar Standards Board and ILEX Professional Standards) in December 2013. The recommendations will then be made public in January 2013 and will be available on the Review’s website – www. letr.org.uk.


The regulators will consider what steps they want to take to implement any or all of the researchers’ recommendations during Spring 2013. They will then launch consultations on any changes to the legal education and training process.


The Committee will report on the recommendations in the next edition of “City Solicitor”. However, it will probably be too early then to say what changes will be made to the legal education and training process.


The Committee will continue to look after the interests of the CLLS member firms as the Review moves into the implementation phase. We will keep the member firms informed of developments and progress, through an Open Meeting


if the proposed changes warrant that.


Tony King, Chairman, Clifford Chance LLP


Revenue Law Committee


The Revenue Law Committee continues to focus on commenting on tax matters relevant to the work and clients of City firms, in particular, responding to HMRC and HM Treasury consultations.


In October, we commented on the 20 July 2012 HMRC Consultation Document on Foreign Currency Assets and Chargeable Gains which set out proposals to simplify the tax rules relating to chargeable gains that were announced in the March 2012 Budget. The current rule provides that chargeable gains and allowable losses should be computed and expressed in sterling where the company has a non-sterling functional or presentation currency. The new rule proposed requires companies with non-sterling functional currencies to compute chargeable gains and allowable losses on disposals of shares using the functional currency. This should prevent chargeable gains or allowable losses arising solely as a result of foreign exchange movements.


In summary, we said in response to the Consultation:


• That, in general, we support the proposal as our member firms have experience of a number of scenarios where clients have been prevented from winding-up dormant non-sterling functional currency subsidiaries because of latent sterling denominated chargeable gains which do not reflect real economic gains.


• We agree that the proposed change should apply to shares but we also consider that there are certain other types of assets in relation to which similar problems arise - in particular, ships and aircraft. Ships and aircraft are commonly held through special purpose companies which have a US dollar functional currency.


• We consider that a distinction should be drawn between assets acquired before the date on which this rule change takes effect and assets acquired thereafter. In terms of assets acquired after the date on which this rule change takes effect, we have no strong


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preference between a mandatory or an elective regime; although we would note that since one of the professed aims of this change is the simplification of the chargeable gains rules a mandatory regime may be preferable.


• We agree with the suggestion in the Consultation Document in relation to the basis upon which this rule should apply to transfers within a group. However, we do not see how (if an elective regime were used) these rules could be manipulated by transferring assets between group members who continue to calculate their chargeable gains in sterling and group members who have elected to calculate their chargeable gains in their functional currency.


• In terms of whether or not a targeted anti-avoidance rule would be needed, our view is that this would not be necessary given the anti-avoidance rules already included in the Taxation of Chargeable Gains Act 1992.


Also, in October, we responded to the 17 July 2012 HMRC Consultation Document on proposals to amend the Stamp Duty Land Tax “transfer of rights” or “subsale” rules. HMRC made various proposals because in their view these rules have been central to many SDLT avoidance attempts and they wanted to improve the legislation to prevent such attempts in the future. In summary, we made the following general observations:


• We said that we share HMRC’s frustration with certain advisors who market and implement artificial ‘subsale’ schemes which clearly do not work. However, we do not agree that erroneous views taken by a minority of advisors is a good reason to add further conditions and/or restrictions to the current rules, as this will add unnecessary complexity for no benefit and at worst could adversely affect genuine commercial transactions.


• We therefore do not believe that HMRC’s proposed reforms are necessary. We believe that developments since the introduction of SDLT in 2003 and other proposed changes mean


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