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The DPT – A Distinctly Political Tax!

A round up of the latest opinion

We’ve been busy on all things DPT over the past couple of weeks. We’ve been to Amsterdam and The Hague (a Dutch Road Trip if you will) talking to friends and colleagues about the UK in general and the DPT in particular. Of particular interest was Charging Provision 1 as regards royalty payments – not unsurprisingly given the nature of most Dutch IP structures.

Zoe and Miles spoke at the IBC Conference in London on 21 April 2015 alongside Philip Baker QC, Jonathan Schwarz, Bill Dodwell and various other high profile tax bods where it was agreed by most that the DPT is a Distinctly Political Tax!

We finished last week by presenting a joint webinar on the DPT with our chums from Transfer Pricing Associates in Amsterdam. If you would like a copy of our conference slides please contact Zoe.

As the dust begins to settle, it is evident that the tax profession is yet to reach a consensus on how the DPT will actually apply in practice. This is largely because of the complexity, breadth and subjective nature of the legislation that appears to catch any number of structures and transactions. The confusion arises when you look at the legislation through the filter of HMRC’s interim draft guidance – this clearly attempts to narrow the ambit of the legislation. This is all well and good, but we know that HMRC have a habit of back-tracking on their guidance when it suits them (it is just guidance after all and not binding – ask Mr Gaines-Cooper) and with a potential change in government , who knows what HMRC’s stance will be in a couple of weeks.

None of this is particularly helpful for the taxpayer. As we have said time and time again, in the face of such uncertainty, the best approach is:

  • undertake your own assessment of how the rules might apply;
  • form a strategy to become compliant with the rules or evidence that they don’t apply; and
  • share your strategy with your customer relationship manager (CRM) and HMRC’s specialist DPT team at the earliest opportunity.

However, before you start your assessment take a look at our updated Milestone Plain English Guide to the DPT (download here) or listen to last week’s Milestone/TPA webinar (here).

Of course, if you need any help in deciphering the DPT, give Zoe or Andy a call.

Zoe Wyatt

DDI: +44(0) 20 7534 7183

Email: zoe@milestonetax.com

Andrew Murray

DDI: +44(0) 20 7534 7182

Email: andrew@milestonetax.com

 

April 29, 2015

Zoe Wyatt

Posted by Zoe

Zoe is a Partner at Milestone, she brings extensive knowledge of international tax systems with a special interest in double tax treaties, exploitation of IP and the role of EU law.

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