I was fortunate enough, when a solicitor, to meet very commercially-minded clients as well as benefiting from receiving advice from brilliant tax counsel. We barristers need, however, to produce focused views which clients can understand. A beautifully crafted opinion without clear advice is hopeless. When I started at the Bar, I received a set of instructions together with an opinion of a very eminent Silk. The instructions were simple: “Counsel will find an opinion from learned senior counsel and is asked to explain what it means”. Equally, barristers must remember that ultimately their advice will be tested before a judge. (This dynamic is probably the most significant distinction between a barrister’s practice and that of a solicitor’s.) So tax counsel must be realistic. But not all are. I once saw an opinion on a very ambitious piece of tax planning which concluded with the observation that if the scheme failed to win favour in the House of Lords then at least those instructing counsel would have the satisfaction of knowing that their Lordships were wrong – quite extraordinary!
You often represent high profile individuals in the public eye, what’s that like?
Probably, together with everybody reading this, I enjoy working with experts of whatever nature. There is an energy about them which is invigorating. Ultimately, however, well-known people are still simply looking for advice like everyone else. So, remember to be a lawyer: you’re not the celebrity. Indeed, I often think that, in the music business, there are two sorts of legal adviser. One is the lawyer who would much rather be in the Rolling Stones and who dresses and talks like them; the other kind looks and dresses like a lawyer (whatever that means) and gives dispassionate counsel as a lawyer, not a rock star. The latter tends to give better advice.
What changes in tax law have you seen in the last 30 years of your career?
Tax legislation has increased in length exponentially. In 1979 there were two consolidated volumes of tax statutes, each of which was about 1,000 pages long. There are now seven such books running to over 17,000 pages. Yet the rule of construction remains to ascertain Parliament’s intention. I very much doubt that many MPs have any idea what any tax legislation means – and that is being generous. The second difference is in rates of tax. In 1979, the top rate of income tax on earned income was 83 per cent and on unearned income above a certain level was 98 per cent. So for every £1 of interest earned you gave the Government 98p and kept 2p for yourself. People nowadays do not readily believe this and yet we are drifting back towards higher rates of tax. Interestingly, when rates dropped during the 1980s, the tax take increased. It is plain, of course, that a zero rate of tax will produce no revenue but it is equally the case that a 100 per cent tax rate generates no revenue either. So there needs to be a rate that people feel comfortable with (the “laffer curve”) which is somewhere between these extremes but, ideally, is probably less than the current top rate of 50 per cent. After all, London (“Planet London”, as so called by my friends outside the city) competes for talent with, say, New York, Geneva, Frankfurt, Toronto and so on. Accordingly, the tax rates which apply to businesses, investors and entrepreneurs in London need, in my view, to be attractive by comparison with those other cities. At the moment our rates are about the highest.
Any important developments coming up at the Tax Bar?
So far as case law is concerned, two forthcoming hearings before the Supreme Court stand out. HMRC v Tower MCashback LLP 1  STC 809 (CA) is scheduled to begin on 21 February 2011 before seven members of the court. It involves the meaning of words such as “payment” and “incur” and may radically change analysis of tax planning. The joint cases of R (oao Davies & James) v HMRC and R (oao Gaines-Cooper) v HMRC  STC 860 (CA) will be heard in the summer. These are applications for judicial review of HMRC’s refusal to apply their stated treatment to those leaving the United Kingdom to take up tax residence abroad.
Glad you moved from one side of the profession to the other?
Actually, I am glad I have been both a solicitor and a barrister. Nevertheless, I rather like having more time to think which is a luxury the Bar affords and I very much enjoy appearing in court. Overall, these aspects make up for the solitary nature of the Tax Bar compared with the “buzz” of a vibrant law firm. Also, I have found being a barrister a little more challenging than being a solicitor as you are, in effect, a sole practitioner who is ultimately and uniquely responsible for the advice given and the advocacy provided; but I wouldn’t have it any other way!
Guy Hewetson, LPA Legal, interviewed Patrick Way.