Has the role of a tax advisor changed in your working life?
There has been a transition from general tax advice to more specialisation and increasingly technology is playing a big part in tax work. In the past if you had a brilliant idea to save your client’s some money you might do the same thing for two or three clients. Now using technology you can replicate that idea. This is part of the reason why tax schemes have developed and why HMRC has ended up no longer reacting to single cases but instead try to block an overall action or idea. Whilst technology has brought good things, I still fondly remember the pleasure of being in a really good tax library and sitting down with books.

If you could make one change to UK tax law, what would it be?
I would reduce the top rate of income tax from 50% to 40%, as while the general public is in the ‘mood’ for a higher rate, I see on a daily basis how it influences people’s decisions in a negative way. I think we should lower the rates and align the taxes so that CGT and income tax are perhaps equal. At the moment the system encourages disparity – so you can have a consultant anaesthetist paying 50% tax and a second generation business owner cashing out at 10%. So I would bring everyone into a middle ground, align all the rates and lower and simplify them.

What has HMRC got right?
They actually get a lot right and it seems rather unfair that just as Dave Harnett is stepping down he is getting heavily criticised. HMRC has actually become more effective and with better use of technology. I was impressed by them bringing across the Atlantic the idea of disclosure of anti-avoidance schemes. I think they have to deal with increasing complexity and that their leadership has been impressive.

What has HMRC got wrong?
HMRC has begun to create specialist units like the HNW unit, but they don’t have the specialist staff to man it. We have first hand experience of the HNWU simply unable to get specialist units to cooperate with their agenda and that is in danger of undermining them. On a longer term view HMRC is no longer seen as an employer of choice for graduates in fact the public sector as a whole doesn’t really occur to graduates. What HMRC need to do is train up some real technical specialists rather like in-house tax council. That has to start by recruiting from the top Universities.

Is the alignment of the operation of income tax and NICs a realistic aim?
It’s a great idea but the current system is so embedded it would be hard to change. Realistically a better aim would be to get rid of NIC and have a much more transparent personal income tax system. The current mix confuses the general public and obfuscates what they are actually paying.

What’s the best piece of advice anyone has given you?
Probably the friend who told me I should marry my wife Sue! And then Sue telling me that it wouldn’t be the death of my career if I moved up North. As it turns out the quality of work in Leeds is just as good as anywhere else in the UK including London.

See the article in Tax Journal.

Georgiana Head and Alison Tait with Stephen Einhorn

Thanks to Stephen Einhorn for coming up from London to entertain the private client ladies of the North. Stephen is a highly regarded jeweller who client’s include Johnny Depp, Charlize Theron and Eva Green. He has worked on films including ‘Snow White and the Huntsman’ and ‘Dark Shadows’ and TV series including ‘True Blood’. At a lunchtime event at Brasserie 44 in Leeds, Stephen showed us a wide range of his work and talked us through his career. A truly glittering event where we got to try on some amazing jewellery (diamonds, darling!). Thanks to Jemi Hargreaves for her help organising.

What are your views on the 50% income tax rate?
While I accept that the government needs to generate income from somewhere, I do worry about the impact on businesses trying to incentivise key employees at a difficult time in the economic cycle. Most businesses are currently trying to maintain employee morale and motivation whilst minimising their cost base. The increase in the top rate of income tax has the practical impact of reducing salary package values of top executives at the exact time many businesses are relying on those individuals to drive their businesses through the tough economical circumstances.

Where do you stand on the introduction of a GAAR?
While I can see there is a definite advantage in stopping blatant abuse and anti avoidance, I am not convinced that a GAAR would actually achieve this. The practical application of a GAAR is very difficult to manage and it would be too easy for uncertainty to creep in – a definite disadvantage for clients trying to plan their business and organise their tax affairs. Furthermore there is a risk of over reliance on the GAAR, making it difficult for clients to do legitimate tax planning. Graham Aaronson QC’s suggestion that an advisory panel be created should help address these issues, but I remain to be convinced that it will be sufficient – the very fact that the panel’s status is ‘advisory’ means it can be ignored.

The best piece of advice anyone has given you?
My father told me that ‘even in the most difficult situation there is always the opportunity to find something positive’. I try to live by this and experience has shown me that he was right

What is your view on the public sector cuts?
I sympathise with the individual public sector workers affected by the new pension proposals as it is always hard to deal with a change of direction which affects you financially. However, it does demonstrate the huge disparity between public and private sector pay – most businesses in the private sector have already had to go through these changes to keep costs in control. In the long term, the changes in pensions will put the public and private sector on a more equal footing in terms of reward and recruitment, leading to a more competitive market for talent. I see this as a positive change, although clearly it is a painful process to get there.

What’s the difference between working in a law firm and an accountancy firm?
I originally trained and worked as a solicitor and so have been lucky enough to work for both types of firm. To be honest the only real difference is the area of focus.

How do you combine being a mum with work?
I am fortunate to have phenomenal support from my firm, family and friends. In particular, Ernst & Young are superb; they have been really flexible, allowing me to choose a working pattern that works for me, as well as offering support and informal time off for things like Christmas plays and sports days.

If you weren’t a tax partner, what would you be?
I love travel and so if I wasn’t in tax I would be a tour guide.

See the article in Tax Journal.

What difference do you see between working in practice or in industry?
In a lot of ways it is similar, albeit for just one demanding client (and minus the time sheets of course). I think the breadth of tax issues that have to be dealt with at a good working level is far wider in industry than one individual would experience in practice, but practice offers greater depth of knowledge in specific taxes.

What is the biggest problem facing tax directors today?
Lack of time, and increasing complexity. The level of tax reporting has increased significantly in recent years which reduces the time available to provide tax advice and business support.

Name a recent piece of work of which you are most proud
Getting 30 Finance Controllers from around the world to understand tax accounting in just three hours and seeing them actually enjoy it too. The seemingly impossible achieved!

Where do you stand on the introduction of a GAAR?
A GAAR strikes me as a cop out against specific rules, and would therefore create more uncertainty. Adam Smith was correct in saying that one of the canons of a good tax is certainty, and I don’t believe a GAAR would provide that. The tax disclosure rules have significantly reduced tax ‘mischief’ because the Treasury $nd out about loopholes faster and are able to block them sooner. Adding to uncertainty will simply slow the system down, and make the UK a less attractive place.

If you could make one change to UK tax law, what would it be?
Significantly lower corporate tax (how about 5%)? That would bring in a huge amount of investment, additional jobs, and a significant addition to payroll taxes for the Exchequer. It would free up a lot of HMRC’s time spent on corporate tax scrutiny, when the bulk of the tax take relates to PAYE and NI.

Tax competitiveness – are we moving in the right direction?
A tentative yes – I think the political will is there, but the dra!ing detail remains to be seen. The probability of a significant number of the FTSE 350 rebasing themselves overseas was very high two years ago, but recent announcements appear to have stemmed the tide.

What has HMRC got right?
CFC reform, and tentative acceptance that not all business transactions are tax motivated.

What has HMRC got wrong?
Calling taxpayers ‘customers’ – a real customer has a choice. I also don’t think HMRC invests enough in its people, and as a result it doesn’t reach its full potential.

What are your views on the 50% income tax rate?
The 50% tax rate is purely a political tax and perhaps achieves a political aim as a result, but it does dent the attractiveness of the UK to investors and is at a level where the people impacted by it, start to look at ways around it. It should be removed as soon as possible, but that will be driven by politics I fear.

If you weren’t a tax director, what would you be?
A builder. I like building and creating things, it gives me a sense of satisfaction, and a completely different set of problem-solving skills.

See the article in Tax Journal.