Robert Brodrick Payne Hicks Beach

The UK, and London in particular, remains a top-tier destination for HNWs and UHNWs, insists Robert Brodrick, tax partner and chair of Payne Hicks Beach. Mobility, however, has become ‘so complicated’ that advice is more necessary than ever.

have set their corporation tax levels low to attract inward investment. But any reduction in global business is likely to have knock-on effects. Economist Mark Pragnell issued a warning at a BVI Finance- hosted roundtable in July that some structuring deals involving BVI companies might not happen, ‘not because the BVI is complicit in some form of tax avoidance, [but] because actually the BVI is probably the place you would put the joint venture in terms of structuring to handle that expansion’. As a consequence he regards the global minimum tax as a step in the wrong direction. ‘This is in the long term not the right thing for the global economy – not the right thing for the IFCs.’ It’s not the scale he’s worried about, but ‘the direction of travel’.

Sophie Dworetzsky Charles Russell Speechlys

With a client-base of entrepreneurs, business owners and high-fl ying fund managers, Sophie Dworetzsky is a ‘go to’ for those in need of intelligent advice on structuring. She says her practice is growing in ‘depth and detail’ as HNWs ponder the future tax landscape.

Harriet Kwarteng KPMG

As part of KPMG’s private client team, Harriet Kwarteng helps HNWs ‘navigate the ever-growing complex legislation they face’. Some of that legislation may even have been drafted at her kitchen table – by her husband, the business secretary.

AND THAT’S A PERTINENT question: what is the direction of travel? With details of the OECD’s global tax due to be fi nalised in October, Washington will also be considering a new tax initiative of its own from the Biden administration. A law called ‘Shield’ – which, believe it or not, stands for ‘Stopping Harmful Inversions and Ending Low-Tax Developments’ – will replace an earlier piece of legislation and work alongside Gilti. Crucially, this will deny ‘corporate deductions’ on fees paid to businesses in low-tax jurisdictions – thereby stymieing US fi rms’ abilities to set these costs against their tax bills. According to a KPMG report, the move appears to be targeting ‘non-US-parented groups’ because the US ones are largely hit by Gilti already. But further Shield-related proposals include doubling the Gilti tax rate to 21 per cent. The salient point is that Shield could be news for jurisdictions with direct fl ights to New York and Miami – in a way that the OECD-led global minimum tax initiative simply isn’t. ‘Imagine if I’m a US company and I’m buying goods or services off a company in Cayman and I don’t get a tax deduction for it,’ declares James Quarmby, a partner at Stephenson Harwood in London. ‘I’m going to stop straight away. If I don’t get a tax deduction I’m paying tax on my expenses, and that’s enough to put anyone out of the business.’ But what really worries Quarmby isn’t Shield, it’s what the EU does with it – and with the new global corporate minimum tax. ‘The real killer is actually EU blacklist,’ says Quarmby, who insists the EU ‘would love to use the cover’ of the OECD’s initiative to blacklist jurisdictions it already dislikes. He notes that since January, EU member states have been obliged by law to impose sanctions on blacklisted jurisdictions, making it more than just a ‘naughty step’. If every jurisdiction with a corporation tax rate lower than 15 per cent were to be blacklisted, the move would have far-reaching effects. ‘That’s all the overseas territories, that’s all the Crown dependencies, that’s Ireland in there. That’s Luxembourg in there. We’re in a horrible world and I wouldn’t put it past the EU to do that. If it ends up on a blacklist it’s going to affect everything.’ So even though the OECD’s global minimum tax agreement

doesn’t legally oblige jurisdictions to impose their own 15 per cent, might certain low-tax or tax-neutral jurisdictions fi nd themselves being forced to do so by the weight of practical considerations? Geoff Cook says he could imagine – ‘push come to shove’ – places such as Jersey introducing it for the segment of fi rms covered by the proposals (with turnovers north of Ð750 million), or perhaps following the Hong Kong route by introducing a 15 per cent headline tax on a territorial basis, so all earnings outside the jurisdiction are excluded. The likes of Ireland or Luxembourg might not suffer either – after all, if they swallowed the 15 per cent they would still be lower than the US’s current rate of 21 per cent and almost half Biden’s mooted

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