CommitteeReports


A historic day for the Company as the Junior Warden, Alderman Fiona Woolf was elected as the 686th Lord Mayor of the City of London on 30th September 2013


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we believe that there are certain types of planning, e.g. in relation to working capital arrangements, which should be unobjectionable from a policy perspective. However, our most significant concern relates to deferral arrangements. Such arrangements are mandated by regulation in a number of different business areas, and the tax legislation currently deals with the tax effect of such arrangements in an entirely unsatisfactory manner. Even where those arrangements are not mandated by law, they are used to encourage responsible behaviour. Using a corporate member to manage such deferral arrangements in an LLP structure has to date been the most efficient and straightforward thing to do. If it is not going to be acceptable to achieve deferral in this way going forward, the Government must introduce an alternative option which essentially puts taxpayers in a position where they ultimately do not tax pay if they never receive, or have clawed-back, an allocation of profits from a partnership. We cannot accept the proposition that a mixed membership partnership where the corporate member serves a legitimate business purpose such as managing working capital or facilitating remuneration deferral should be at risk of being caught by


4 • City Solicitor • Issue 83


rules designed to apply to aggressive tax avoidance schemes.


HMrC Consultation on Strengthening the banking Code


We had a number of principal concerns on the proposals, being:


• The Consultation Document contemplates the imposition of a very real sanction, in that naming (either as a non adopter or as an adopter viewed as being non compliant) will inevitably carry some degree of shaming – i.e. deliberate damage to reputation, just as banks in the UK are working hard to rebuild reputations.


• The proposals are further steps in a bad direction in that the original introduction of the Code in 2009 amounted to the introduction of a significant new element of the UK’s tax code that completely sidestepped the critical parliamentary assessment that would have applied if the introduction of the Code had been subject to legislation. In our view this regrettable approach is extended by the proposal now to legislate for enforcement of the Code without legislating the Code (and ideally the surrounding guidance) as well.


• The announcements proposed for the Autumn Statement are not obviously aligned with HMRC’s


duties of confidentiality in that they would combine publication of a test from which the identity of banks within scope can be established with publication of a list of banks who have adopted or re adopted the Code from which it would be straightforward to identify those who have not at that date adopted.


• The sanction (damage to reputation) is a blunt and potentially disproportionate instrument in at least two senses. The harm to some sorts of banks may be far greater than to others (compare the position of a bank with a large base of retail depositors who may be motivated to close or run down accounts with that of a pure investment bank). The sanction could not readily be applied in a manner which distinguishes between more or less innocent cases (compare a bank which deliberately chooses not to adopt because it considers that the procedures proposed would interfere with its intended approach to business with that of a bank whose adoption is delayed until just a few days after the Autumn Statement because one final internal approval took time in coming through).


• The proposed application of the revised regime to “potentially abusive transactions” is particularly


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