60-second interview: Nicholas Hughes

What are your clients talking to you about at the moment and does anything concern you?

The statutory residence test and the tax issues for non-UK owners of UK residential property seem to be recurring topics presently. The frequency of major tax changes and the ever-increasing complexity of the tax system are making life difficult for the tax adviser and the client. This leads to uncertainty and hinders long-term tax planning. This cannot be in anyone’s interests.

What key trends are you following?

I could not claim to be systematically following any key trends, as such, but it is interesting to see how quickly attitudes to tax planning are changing. The days of mass-marketed schemes and aggressive, but legitimate, tax avoidance seem to be well and truly over. Newspapers now readily report about high-profile individuals and their failed attempts to reduce their tax liabilities as if they have engaged in underhand activities – and even though they have not committed any wrongs (in a criminal sense).

Privacy as to one’s tax affairs can no longer be assured and this scope for adverse publicity in respect of legitimate tax planning has become one of the factors which must now be taken into consideration. Many of these high-profile individuals will not have properly understood the investments that have been made on their behalf. Clients are now more than ever reliant on their
tax advisers to give them good advice.

Even the morality of tax mitigation (as opposed to tax avoidance) is increasingly being called into question. I saw that recently one of the political parties had rejected a significant donation from a wealthy individual apparently because, as he has non-UK domicile status and is not ‘a full UK taxpayer’, the donation did not meet the party’s ‘strict ethical standards’.

What’s your view on plans to simplify laws and make it a criminal offence for Britons to hold undeclared income overseas unveiled by Treasury?

Tax evasion is already a criminal offence. Although billed as ‘simplification’, the underlying reality is that the burden of proof is shifting from HMRC to individuals (to make it easier for HMRC to secure convictions). This shift is reflected in other proposed changes, such as the power for HMRC to recover tax debts directly from the bank accounts of anyone who owes more than £1,000.

Although some view these changes as an unwelcome erosion of taxpayers’ rights, the fact is that the cost of collecting tax is too high, the tax gap needs to be made good and the annual deficit has to be brought under control.

What we must try to avoid is an increase in the tax burden for those who already pay their taxes simply because others do not pay theirs. This would be even more unwelcome.

What attracted you to Saffron Tax?

The opportunity to work in a private client-focused environment with knowledgeable people with whom I have worked well together over a number of years, and whose practice
is based on building and sustaining long-standing relationships with
clients and their families and advising them well.

What immediate and long-term priorities do you face in your
new role?

Saffron is a relatively new business and the immediate task is to settle in, embed my clients and then help to build the client offering.

What’s the biggest lesson you’ve learned during your career?

I have tried to take one day at a time. 

Nicholas Hughes is partner at Saffron Tax Partners