Mediation and Tax: When preparation meets opportunity? 

Registration
9.30am

Workshop Commences
10.00am

Introduction

• Not considering tax can be expensive and lead to unhappy clients for the adviser.
• Not a matter for the meditator ? 
• Mediation is facilitated negotiation between the parties who reach the solution.
• The UK Tax rules also often require clarity as to what it is that is being settled or brought to an end and how.  

Importance of preparation and consideration of outcomes in advance 

• Need for preparation because of complexity and uncertainty etc.
• UK tax position can be complex and in need of careful detailed analysis.
• What the parties agreed? Ascertain on a contractual basis
• NB in tax cases the onus of proof is on the taxpayer and not HMRC.
• Not unusual for out of the ordinary and unexpected matters to arise and form the basis of a settlement.
• What does the client want?  What do other parties want?
• “Gameplay” potential outcomes in advance see what possible and where there may be  a “landing zone”
• Reporting

What is the payment for?

• Difficult but vital question
• Payer and payee’s position is not the same

Relevant taxes

• Main UK taxes to consider
• Income tax (“IT”)
• Capital Gains Tax (“CGT”)
• Corporation Tax (“CT”)
• Value  Added  Tax (“VAT”)

IT

• The capital or income question
• “Hole in the Profits”
• The sterilization principle
• Termination of a Contract
• Withholding Tax
• Reimbursement
• Overview Summary
• Deductions
• Some unusual cases that may be useful

CGT

• The Charge to CGT
• Deemed Disposals
• S 22 TCGA
• Zim Properties v Proctor [ 1985] STC 90.
• Compensation and capital gains taxation

CT

Broadly similar principles to those for IT and CGT apply for CT purposes.

VAT

• General
• The Charge to UK VAT

Consideration: Settlement of Disputes: Disputes involving suits for damages

• As a final point, there is no supply for VAT purposes simply because a party agrees to settle out of court
• Settlement of disputes involving claims for payments of supplies made
• Termination of a contract on payment
• Payment in kind - Double supply?

Tax risks and  the mediation  settlement agreement

• General
• Contractual Risk Allocation
• Any overarching principle that could be agreed?
• Terms of the Settlement Agreement
• VAT
• Payment VAT inclusive or exclusive?
• Transfer of business as a going concern?
• Income tax
• Care is needed with the anti avoidance provisions
• Hole in profits?
• Withholding tax is there annual interest being paid? are there royalties?
• Capital gains tax
• Capital sum derived from an asset
• Reliefs
• Double disposal if payment inspected
• Corporation tax
• SDLT etc
• S 53
• Double charge if in effect to swap

Workshop Closes
4.00pm