Press Room

1 Jul 2021

Andersen LLP – Tax News June 2021


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Andersen LLP

June 2021

In this month’s edition, Andrew Parkes kicks proceedings off with a critique of President Biden’s MIA Tax Plan and suggests an alternative strategy to implement tax policy and picks up on my Amazon spat – that unless tax policy is really, really thought through the law of unintended consequences will come home to roost. We then take a look at the G7’s Tax Plan and give our thoughts to the viability of what’s being proposed and whether this will ever see the light of day.

Zoe Wyatt takes over with a very timely piece on crypto tokens. We are seeing a significant uptick in activity across the blockchain and crypto space. Suffice it to say that if you have any questions on this topic please contact Zoe whose practice is now very much focussed on this new and fast developing sector. Zoe recently took part in the Taxation in the Eurozone panel discussion hosted by Crypto UK. To watch a recording of this click here.

Anthony Lampard and Alice Wells guide us through various recent HMRC consultation documents with Anthony then giving an overview of problems arising within HMRC (and thus affecting the taxpayer) as a result of the Government’s reaction to the pandemic.

I wrap up with a quick sweep of recent developments ranging from DAC6 to Tooth.

Happy reading!

Miles Dean
Head of International Tax
Andersen LLP


  1. The US: President Biden’s MIA – Andrew Parkes
  2. Crypto and Blockchain Tax considerations of founder, shareholder, adviser and employee tokens – Zoe Wyatt
  3. The UK: Recent HMRC Consultation Documents – Anthony Lampard and Alice Wells
  4. The UK: Unexpected Consequences arising from Covid – Anthony Lampard
  5. News Sweep – Miles Dean

The US

President Biden’s MIA

We’ve said it before and we’ll say it again, there’s something about those who work on tax policy and their love of acronyms. US politicians, or at least their staffers, are no exception to the rule. In fact, they appear to come up with an acronym then work backwards to the law they want. President Biden’s Made In America Tax Plan (with its SHIELD) is a case in point.

The main aspects of the MIA plan are:

  • increase the headline rate of corporation tax (CT) from 21% to 28%;
  • 15% minimum tax on the book profits of the largest companies;
  • double the GILTI (global intangible low-taxed income) tax to 21% and stop off-setting low taxed income with tax from high tax countries;
  • make the already draconian inversion rules even more so;
  • use the tax system to stop globalisation; and
  • the one that has been catching the journalists’ eyes – a worldwide minimum tax rate.

What makes this plan unoriginal and possibly doomed to failure (from a technical point of view at least) is that it doesn’t seem to address the structural problems with the US tax system and will simply add another layer of complexity. This is bound to lead to unintended consequences and loopholes with years of litigation to follow. That’s if it even gets enacted.

We’re not into gambling, but if we were, we’d bet on the MIA not getting the 10 Republican votes it will need in the Senate to avoid being a reconciliation bill. Furthermore, you’d be brave to bet that it will even get to the 50 overall needed for Vice-President Harris to break the tie.  The problem is that left leaning Democrats might think it doesn’t go far enough whilst those in the centre think it’s already too much, thus causing it to go missing in action…

Lipstick on a pig…

The issue that has got the politicians hot under the collar is the perceived unfairness of US multinationals who bank profits offshore, profits that the US believes should be taxed by Uncle Sam.

However, rather than plastering the pig with the proverbial lipstick, how about going to the root cause of the problem? Why are US multinationals able to cause this problem?  The answer is the Subpart F rules plus allowing taxpayers to “check the box” for non-US entities.

A better approach would surely be for the US Government to decide what profits it wants to tax and design the rules that allow them to do that, not as a new layer placed on top, but at the source of the legislation. If there are problems with Subpart F, change Subpart F. If all the “check the box” rules do is allow US companies to do what they could do by other routes, block those routes and repeal “check the box,” instead of treating it as some sort of unalterable truth.

Do as I say or else!

This approach would also allow the US to decide on the taxation model it wants without having to try and strong-arm other countries into agreeing to a minimum tax because sorting their own tax system is filed under “too hard”. For example, Ireland has its 12.5% CT rate for trading companies. Rather than forcing Ireland into increasing its CT rate (and causing the diplomatic ructions we are now seeing), redraw the Subpart F rules to tax the relevant profits in the US with a credit for the Irish tax. This solution is in the US’s own hands and does not impose on other states in an effort to address the shortcomings of its own tax system.

Now let’s look at the proposals for the inversion rules. There is absolutely nothing wrong with a rule that makes a company resident based on where its management is carried out; in fact, it is a sensible rule as it allows substance over form to apply to company residence (well, more so than with just an incorporation rule). But to apply it based upon where the shareholders are is overreach and setting the limit at 50% is way too low given the large proportion of US Funds that are likely to own stakes in both groups. Plus, will the US allow tax treaties to do their work or will this be a unilateral power and tax grab by continuing the concept that their inversion rules are not subject to tax treaties? Based on past history we think we can hazard a guess that the words treaty override will be appearing on this one.

Lost opportunity

The US corporate tax system, like most tax systems (including the UK’s it has to be said) has some fundamental flaws, but rather than grandstanding and taking the populist route while probably not achieving the stated aim, and also not fixing those flaws, President Biden should give up on his MIA, show Statesman like qualities and actually fix the underlying problems; however, given the realities of the US political system we appreciate we might as well ask for the moon.

The G7 Tax Plan

Following on the heels of Biden’s MIA, the OECD and G7 (with the US as a driving force in both) have been pushing their own global tax agenda which also includes, funnily enough, a minimum corporate tax rate. As has been widely reported in the media the G7 finance ministers met in London on 4-5 June to discuss and ultimately sign-off on a proposal supporting a 15% global minimum tax to be levied on a country-by-country basis. They also committed to reaching an “equitable solution” on the allocation of taxing rights (which is of course the key to whether this has any chance of working). It is notable that the US originally called for a 21% rate, but this was reduced to 15% by way of compromise.

The Two Pillars

Central to these discussions is the digital economy and a desire to introduce a global minimum corporate tax rate as proposed by the OECD’s Inclusive Framework introduced in 2019, central to which are Pillars I and II. It is also aimed at preventing a race to the bottom, whereby countries reduce their corporate tax rate in an attempt to win business (of course, the UK has jumped the gun and announced in Budget 2021 that our CT rate will increase to 25% from 1 April 2023 quashing any notion that post-Brexit we would seize the initiative and become ultra competitive in terms of tax).

This two-pillar approach is designed to reset the way in which corporate tax is levied. It is, in effect, a type of formulary apportionment or unitary taxation (albeit a watered down version, and one that doesn’t seem to gel with the OECD’s view of formulary apportionment in the transfer pricing guidelines).  Pillar I allocates a portion of a multinational entity’s residual profit to the jurisdiction where the revenue is sourced (the “market country”), whilst Pillar II looks to the introduction of a global minimum tax rate (15%).

The allocation key awards taxing rights to the market country on at least 20% of profits exceeding a 10% margin for the largest and most profitable multinational enterprises.  Some of those profits would be allocated using a formula rather than the arm’s length standard.

There’s no doubt that reaching a consensus at G7 level is an achievement, but it’s not a given that the OECD’s proposal will see the light of day as it must also be approved by the G20 and the “inclusive framework” of 139 countries.  For one, the EU (or rather certain Member States) will quite clearly be impacted by an enforced tax hike. The Republic of Ireland, for instance, has been vocal in its opposition to a global minimum, citing (quite rightly to my mind) that smaller economies need to be more competitive if they are to survive let alone prosper; and tax is one way of achieving this.

Various member states (Ireland, Poland and Hungary) have made it clear that they will not accept a global minimum rate unless there are exemptions or carve-outs. The UK has also sought to protect its own interests by proposing that the financial services sector is exempt. And herein lies the problem: for this policy to succeed, countries will be required to relinquish their sovereign right to set their own tax rates.   Tax rates are so embedded into individual economies that removing the ability of countries to chart their own course can only lead to the richest and biggest getting err bigger and richer at the expense of the others, as anti-poverty campaigners have pointed out.

Two points here spring to mind:

No taxation without representation” was a slogan that came to prominence in the American Revolution, used by American colonists who argued that, as they were not represented in the British parliament, taxes imposed upon them were unconstitutional. The same must be said for the OECD’s proposal as championed by the G7 – that the right to set one’s tax rates has been abrogated to Washington.

This is surely the thin end of the wedge and countries should oppose this development with all their resolve.

Secondly, and related to the first thought, is the grim reality facing the aforementioned Member States that oppose the minimal global rate: they may not have a choice but to acquiesce. Why? Because the Covid Recovery Package allows the EU to borrow up to €750bn in the financial markets and then distribute this to Member States to help them recover from the economic havoc wrought by the reaction to SARS-CoV-19.  Of course, the EU has significant discretion over who gets what and when, in other words it holds the whip hand and can use this as a lever to push through its agenda. It has been reported in the press that Ireland has already been spoken to by the Headmaster…

We live in interesting, if not frightening, dystopian times.

Andrew Parkes
National Technical Director
M: +44 (0)7522 229 589 or

Crypto and Blockchain

Tax considerations of founder, shareholder, adviser and employee tokens

Many blockchain projects raise funds to develop their technology and the network through:

  • a private token sale through issuing a simple agreement for future tokens (SAFT); and/or
  • a public token sale through an initial coin offering (ICO).

In the many cases that we work on, the tokens are typically utility and/or governance tokens.  A utility token may provide access to the network’s products or services, whereas a governance token will allow the holder to vote on how the network operates.

A SAFT typically provides an obligation on the company to provide tokens where there is a token generation event (TGE).  Absent a TGE, there is no obligation on the company to provide tokens or compensation in place of tokens.

Typically, SAFTs are issued to some or all of the following categories of recipients:

  • Token investors
  • Founders
  • Shareholders
  • Advisers
  • Employees.

The tax treatment of tokens acquired under a SAFT will differ depending on which camp the recipient falls within.  Some will fall within more than one category.  The facts will dictate which tax treatment to apply and establishing a value for the SAFT is critical in assessing the amount of tax that will be paid.

Independent third-party investors acquiring the tokens under the SAFT typically have a very clear tax position because they have a base cost (i.e., the price they paid). It doesn’t matter that subsequently, at the time they receive their tokens, there is an ICO where the tokens trade at a higher price.  We do not comment on token investors further in this article.

In an ideal world, all of the remaining categories of recipient would enter into a SAFT under which they pay market value for their tokens (at the time of entering into the SAFT) and that market value would be nil or low due to a number of hurdles to a TGE taking place. These might include:

  • Technology not yet being fully developed
  • No revenue / no confirmed commercial traction
  • Volatile market
  • Competitors
  • Regulatory risk.

However, the real world is not ideal. In practice:

  • Founders will be the last to receive a SAFT as they are typically focused on developing the technology, raising funds, preparing for a token sale and their attention is turned to their SAFT merely days or weeks before an ICO.  The position as to whether they received the tokens by virtue of their shareholding, or their employment duties is unclear and there is often insufficient tangible evidence to point either way. Although it shouldn’t, HMRC has the benefit of hindsight and the founders could then be taxable on the value of the tokens at the TGE, even if the tokens are subject to a lock-up (i.e. where the holder can’t sell the tokens until the lock-up has ended).
  • Advisers will agree to provide services in return for tokens. These tokens will be treated as consultancy fees and subject to UK income tax (or where the service is provided through a company to UK corporation tax), but absent any evidence to show the value of those services, the adviser could be taxed on the value of the tokens at the time of receipt (i.e. the price they are trading at after ICO).
  • Employees will be subject to income tax and the company will need to deduct PAYE including employers NI at the time of a taxable event.
  • Shareholders will sometimes subscribe for equity and their subscription agreement will include the right to receive tokens / entering into a SAFT, but no price for the tokens is established. This could lead to the receipt of tokens at a TGE being treated as a dividend, subject to income tax at 38.1% or potentially exempt where the shareholder is a UK company.

In all of the above scenarios, the recipients may be subject to a dry income or corporation tax charge. Potentially forcing them to sell the tokens to fund the tax.  In some cases, the tokens will economically belong to the recipient at the TGE, but they cannot sell them until the lock-up has ceased, only further frustrating the dry tax charge impact.

Our recommendations are:

  • Founders/shareholders: most blockchain companies will know early on whether there is scope to incorporate a utility token into their product/service offering and, if so, that they will aim to undertake an ICO. Founders should prioritise their own SAFTs by:
    • undertaking a valuation of the tokens as early as possible (and ideally pre issue of SAFTs to third parties); and
    • drafting the SAFT to include an acquisition price designed to demonstrate that the market value (at the time of entering into the SAFT) is being paid.
  • Advisers: should provide their annual / monthly / daily consultancy fee rate and negotiate a discount in return for a SAFT. This rate and discount should be documented by email and in the recitals to the SAFT.  The adviser should report the pre-discount amount as income on his/its tax return. A dry tax charge should only arise in respect of the discounted amount (i.e. the value attributable to the SAFT) and not the value of the tokens on receipt of a TGE.
  • Employees: early employees should enter into a SAFT with an acquisition price which seeks to establish the market value for the tokens at that time.  For ongoing employee incentivisation, consideration should be given to providing the tokens to employees under option arrangements; the employee only exercises the option when he is ready to sell the token (and can, therefore, fund the tax charge).
  • Document all hurdles to a TGE. Review these hurdles at regular board meetings documenting any changes.
  • Obtain an independent market valuation of the token. Our valuations team regularly undertake valuations of digital assets (as opposed to valuing the shares in the company). This can be invaluable in addressing any HMRC inquiries which will take place at a time when (hopefully) the tokens have proved to be valuable because all of the hurdles to a successful TGE have been overcome.

Zoe Wyatt
M: +44 (0)7909 786 144 or

The UK 

Recent HMRC Consultation Documents

Following the Budget in early March, the Government published a number of consultation documents which provide some interesting insights into the focus and direction that the government and HMRC are considering taking with regards to taxes over the next few years.

There was some disappointment that there were no further comments on the possible anticipated changes to taxation, such as to capital gains tax and tax relief on pensions.

However, on reflection the consultation documents highlight various recurring themes, which may be of equal importance to taxpayers, their advisers and Government.

Tax System for the twenty first century

These themes include the need to ensure that the tax system is fit for purpose for the twenty first century. This includes extending Making Tax Digital for both income and corporation tax purposes, whilst at the same time making it easier for taxpayers to be compliant.

The suggestions considered include learning from other countries as to:

  • how to harness information already provided to HMRC, to avoid duplication, whilst also enabling tax returns to be pre-populated;
  • aiming for consistency between processes and rules for different taxes; and
  • using real time information to estimate tax liabilities and accelerate when tax is paid, so minimising cash flow problems for taxpayers in an economic downturn.

It has been acknowledged that some of these potential changes may create problems for businesses where the income is not generated on a regular basis, or where taxpayers find tax payments needing to be advanced. These may have economic rather than just cash flow implications.

Improving Standards of Tax Advice

The consultation documents also include the recurring theme of combating poor standards of tax advice by some advisers and building on the existing powers available through the Disclosure of Tax Avoidance Schemes rules.

The common themes here are to define “tax advice”, ensure that the advisers have appropriate insurance, give HMRC powers to either ring fence advisers’ assets or apply for winding up petitions and holding UK parties responsible where the adviser is non-UK based. The government also focuses on the need to educate taxpayers about the implications of being involved in what may be, or are perceived, as high-risk tax arrangements.

Improve reporting overseas income & gains

Overall, there is a desire to educate taxpayers who have overseas interests to ensure that they accurately report the taxable income or gains first time. This is linked to HMRC receiving much more information from overseas tax authorities through the Common Reporting Standards (CRS). Although this information is not always user friendly, it has highlighted inconsistencies in reporting of overseas taxable transactions.

It has been suggested that information received via CRS should be shared with the taxpayer or their adviser to enable any uncertainty to be resolved promptly.

Notification of Uncertain Tax Treatment by large businesses

This is a second consultation. It builds on the desire to ensure that HMRC are informed earlier where a large company or a LLP has chosen an uncertain tax treatment for a transaction that is filed in a return submitted after 30 April 2022.

The rationale being that the sooner that HMRC are aware of such a situation, they can discuss the matter with the taxpayer concerned. This has two benefits, firstly, the discussion occurs at a time this is relatively fresh in the mind of the taxpayer and secondly, before this may apply to more than one set of tax computations.

This covers both new transactions that have not been considered by the tax legislation and also where the taxpayer has used an interpretation or application, for a transaction, that is contrary to HMRC’s known position.


Many of these consultations have highlighted areas where change is needed and should be welcomed. However, some of the issues are not easily resolved and it is accepted that at this time HMRC has significant pressure on its limited resources. Will HMRC be able to focus on these? Only time will tell.

Also, taxpayers must be aware that if HMRC takes time to educate or interact with them, then future failures to comply with the tax system may result in higher penalties being applied.

Anthony Lampard
M: +44 (0)7983 927 096 or

Alice Wells
M: +44 (0)790 870 4787 or

The UK

Unexpected consequences arising from Covid

Individuals who move to the UK for the first time need to register with HMRC and to apply for a Unique Taxpayer Reference number (UTR).

Rental of UK property by a non-UK tax resident

Where a non-UK resident is receiving rent from a UK property, they need to register under the non-resident landlord scheme (NRLS). Failure to do so results in the tenant or agent having to pay the tax (20% of the net rental profits) over to HMRC. This may have cash flow implications for the landlord as under the NRLS the tenant can pay gross.

Sale of a UK property by a non-UK resident

Finally, when a non-resident individual sells a UK property, they need to submit a tax return and pay the tax within 30 days of the transaction being completed. This deadline also applies to UK residents selling UK property.

The Office of Tax Simplification (OTS) has recently highlighted that this is an exceptionally tight deadline and suggests it is extended to 60 days.

Further issues arise for those non-residents who have not previously rented out the UK property that they have sold. In such cases they are unlikely to have a UTR number and because they have not previously had a UK tax filing obligation they will not have completed a form 64-8, which gives HMRC authority to speak to their tax adviser.

Generally, HMRC wants the capital gains tax return to be filed online, but this can create problems where the taxpayer neither has a UTR or a national insurance (NI) number. In those circumstances there is a need to request a paper return. However, HMRC should not in theory speak to an adviser unless there is a form 64-8 in existence.

Current Problems

HMRC are under unprecedented pressure at the moment – due largely to the fact that many offices have simply shut down for the past 12+ months. Backlogs are bound to occur and this is now happening.

Prior to Covid, it was taking about 4-6 weeks to receive a UTR, it is now taking about 4-5 months to receive.

In the case of NRLS, approval would normally be forthcoming within 3-4 weeks.  This is now extended to a number of months. In some instances, there is a need to submit more than one application, as HMRC are unable to find the original application. This has cash flow implications for the landlord, in that they can’t receive the rent gross until HMRC have approved the application.

Where the seller of the UK residential property has not previously had a UK filing requirement, there is a need to submit both a form 64-8 and also a request for a UTR number. However, the 64-8 will not be approved by HMRC until a UTR number has been issued.

Tax Payments

A practical problem is that a non-resident can struggle to make a tax payment where they don’t have either a UTR number and/or a NI number. This is because the payment can’t be linked to the taxpayer’s account. Therefore, any tax payment is likely to be placed in an unallocated payments account and then there is the subsequent issue of being able to tie up this payment to the taxpayer’s account later.

Deferring payment is likely to result in interest and penalties being demanded once the tax is paid and further correspondence with HMRC to have these removed. It is not always certain that the interest and penalties will be waived.

Moral of these stories

Taxpayers and their advisers need to be proactive to try and minimise the delays in receiving the necessary approvals from HMRC. Applying sooner rather than later is the motto here.

There is a need to remind non-resident clients who own UK property of the tax filing deadlines and seeing whether some of the information can be gathered in advance of a sale.

There may be a benefit in considering whether it is possible to request a UTR and submit a form 64-8 now, rather than waiting for when the UK property is sold.

Anthony Lampard
M: +44 (0)7983 927 096 or

News Sweep

Netherlands – Proposes Beneficial Ownership Register for Trusts

On 26 April, the Netherlands formally announced the proposed establishment of a beneficial ownership register for trusts and comparable legal constructions in line with article 31 of the Fifth Anti-Money Laundering Directive (5AMLD).

The register would apply to:

  • all national and foreign trusts for which a trustee is resident or established in the Netherlands; and
  • all trusts with non-Dutch trustees that either enter into a business relationship in the Netherlands or acquire real estate in the Netherlands.

The implementing law will require trustees to obtain and maintain certain information about the trusts and beneficial ownership thereof on a register administered by the Chamber of Commerce. Of course, the concept of beneficial ownership in the context of trusts (particularly discretionary trusts) is unusual. As such it is likely that all named beneficiaries will have to be disclosed in the register.

Ukraine – Withholding Tax on Foreign to Foreign Sales

Harking back to the Vodafone India case, the State Tax Service of Ukraine has recently clarified that a non-resident purchaser must withhold tax on capital gains derived by a non-resident seller in the case of a sale of shares in a Ukrainian company.

Gains arising on the sale by the non-resident shareholder to the non-resident purchaser will be liable to WHT at 15% unless reduced pursuant to a relevant double tax treaty. In such circumstances, the purchaser must first register with the Ukrainian tax authorities before making any payment for the Ukrainian company shares. The tax withheld by the purchaser must be paid over to the State.

European Union – DAC7

We’ve discussed the EU’s Directives on Administrative Cooperation (or DACs) on these pages several times in the past, most recently in respect of the UK’s departure from the EU when the DACs ceased to apply.

The EU Council ministers unanimously voted in favour of DAC 7 on 21 March. This is the sixth amendment to Directive 2011/16/EU, the main features of which are:

  • new mandatory exchange of information for operators of certain digital platforms;
  • the extension of the mandatory automatic exchange of information to royalties; and
  • a new legal framework for joint audits.

The mandatory exchange of information for digital platform operators (think Airbnb) is the significant development in DAC7 and applies to:

  • digital platform operators that are resident for tax purposes, incorporated or have their place of management / PE in a Member State; and
  • non-EU digital platform operators that operate digital platforms that facilitate the carrying out of reportable transactions.

Reportable activities include:

  • property rentals
  • transport rentals
  • provision of personal services
  • sale of goods

The information to be reported will include information relevant to the correct identification of the seller (e.g., name, registered office, TIN, VAT number, date of birth, business registration number, each member State of residence of the seller) and information relevant to the determination of the profits realised by the seller through the platform (e.g., the amount of the consideration paid to the seller and the number of activities for which it was paid, the account number where the consideration is credited, the address of the property being rented out, number of days for which it was rented out and type of property).

The information should be reported by the platform operator to the competent tax authorities within 31 January of the year following each calendar year starting from the one beginning on 1 January 2023.

The UK – Commissioners for Her Majesty’s Revenue and Customs v Tooth UKSC 2019/0136

The Supreme Court has given their decision in Tooth and we’re not sure if the correct way to describe it is “as you were”, “score draw” or “sanity reigns”.

The point won for the taxpayer (and for everyone else too) is that to start the 20-year clock for discovery the deliberate action has to be designed to mislead the Revenue and not just to make a deliberate entry on the tax return (i.e., as with penalties). Also, it is necessary to read the tax return in its entirety and not just a particular entry to see if it was inaccurate. This is how “deliberate” was understood to work before Tooth.

Then for HMRC, although it is dicta, the Supreme Court threw out the idea that a discovery could become “stale”. This is also how our Andrew Parkes understood discovery to work when he was at HMRC. An Inspector had the time limit to make the assessment and his discovery had to be within that time limit. It didn’t matter when within the time limit, he made the discovery – that was how enquiries worked.  In many instances HMRC would be trying to negotiate a contract settlement and it was only when negotiations had irretrievably broken down would a discovery assessment be made (or when the discovery time limit was approaching!).

So, a score draw, both sides had what appeared whacky ideas to the other side thrown out or the clock was moved back to what was understood before all of this started.

Miles Dean
Head of International Tax
M: +44 (0)7785 770 431 or


Andersen LLP, 80 Coleman Street, London, EC2R 5BJ

Tel: +44 (0)20 7242 5000
Fax: +44 (0)20 7282 4337  |

The content of this newsletter and any subsequent updates we send do not constitute tax or legal advice and should not be acted upon as such. Specific tax and / or legal advice should be taken before acting on any of the topics covered.

Andersen Global is an international association of legally separate, independent member firms comprised of tax and legal professionals around the world. Established in 2013 by U.S. member firm Andersen Tax LLC, Andersen Global now has more than 4,500 professionals worldwide and a presence in over 149 locations through its member firms and collaborating firms.


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