Graham Aaronson KC is a founding partner of Joseph Hage Aaronson LLP and chairs the firm’s tax disputes team.
During his time as a member of Pump Court Tax Chambers he established a reputation as one of the leading tax advisers and advocates of his generation. He has advised or represented most of the major corporations conducting business in the UK, appearing in many landmark cases such as BMBF v Mawson. He initiated the EU law challenges to the UK corporation tax regime in the ground-breaking Hoechst case, and since then he has been the lead counsel in most of the EU law based group litigation actions dealing with corporation tax.
Since founding JHA, he has focused on helping clients resolve their tax disputes with HMRC or other tax authorities. Where necessary this will include careful preparation and conduct of litigation, but wherever possible his preference is to seek to persuade the tax authorities to accept the client’s position, or to agree a negotiated settlement that achieves the best possible outcome for the client.
He specialises in commercial/corporate taxation, with particular sub-specialities in transfer pricing, oil and gas taxation, structured finance, State Aid and EU Law. He also has particular experience and expertise in dealing with football-related tax disputes, representing several very high profile players and agents.
2016: Asked by the Prime Minister, David Cameron, to examine the allegations of tax avoidance made against him and his family, arising out of the “Panama Papers” revelations. The Prime Minister quoted from his analysis in his personal statement to the House of Commons on 11th April 2016.
2012-13: Appointed by HMRC as chairman of the Interim Advisory Panel for the GAAR, responsible for and co-writing the legally binding Guidelines for the operation of the GAAR.
2010-11: Appointed by the Coalition Government as Leader of the ‘GAAR’ (General Anti-Avoidance Rule) study. His report, recommending and drafting a proposed General Anti-Abuse Rule, was accepted by the Government, and a GAAR based on his report and draft legislation was enacted in FA 2013.
2001-05: Part-time Special Commissioner (equivalent today to a judge of the First Tier Tribunal and the Upper Tribunal).
1995-98: Chairman of the Revenue Bar Association.
1994-97: Appointed first chairman of the Tax Law Review Committee (set up by the IFS, and under the presidency of the former Chancellor of the Exchequer, Lord Howe). Initiated its study of the UK’s tax legislation, and co-wrote its report recommending a complete re-write of the direct tax statutes (which was accepted by the Government and enacted over the following years).
1987-90: Appointed principal tax policy advisor to the Director of State Revenues, Treasury, Israel.
Appointed Queen’s Counsel, 1982
Fellow of the Chartered Institute of Taxation
Cambridge University - MA (Trinity Hall, Law Scholar)
He has been consistently recognised by the leading legal directories “Legal 500” and “Chambers & Partners” as a leading individual in the top tier/band. Since founding JHA the firm itself has also been ranked in the top tier/band in both directories. He has been described in the directories as “the leading Silk of his generation”, “known for his excellent advocacy skills”, and as “superb – a stand out individual”.
Graham Aaronson, Michael Anderson and Steve Bousher provide answers to common questions on transfer pricing methods.
Pricing methods
Accepted methods
What transfer pricing methods are acceptable? What are the pros and cons of each method?
All five traditional transaction and transactional profit methods recognised by the OECD (see paragraph 2.1 of the Organisation for Economic Co-operation and Development Transfer Pricing Guidelines (OECD TPG)) are acceptable, and the use of ‘other methods’ not described in the OECD TPG is permitted if they satisfy the arm’s-length principle and provide a better transfer pricing solution (see paragraph 2.9 of the OECD TPG). The guidance in the OECD TPG concerning the pros and cons of each method is adopted and supplemented by His Majesty’s Revenue & Customs (HMRC)’s own guidance, set out in the International Manual at INTM421000. Where a traditional transaction method and a transactional profit method can be applied in an equally reliable manner, the first type is preferable and should be applied. In broad terms, traditional transaction methods are likely to be appropriate for establishing the arm’s-length price of commodity transactions, marketing operations or transactions concerning semi-finished goods, services or long-term buy-and-supply arrangements. Transactional profit methods, on the other hand, are likely to be preferable where each of the related parties to a transaction makes unique and valuable contributions, where the parties engage in highly integrated activities or in transactions involving the transfer of intangibles or rights in intangibles.
Cost-sharing
Are cost-sharing arrangements permitted? Describe the acceptable cost-sharing pricing methods.
Cost contribution arrangements (CCAs) are permitted. There is no difference in the analytical framework for analysing transfer prices for CCAs compared to analysing other contractual arrangements (see paragraph 8.9 of the OECD TPG). Accordingly, the guidance in Chapter II (Transfer Pricing Methods) of the OECD TPG is relevant to determining the value of each participant’s contribution to the CCA, including the amount of any balancing payment required to align the value of their contributions with the value of their expected benefits, and the value of any buy-in payment or buy-out payment triggered by changes in the membership to the CCA.
Best method
What are the rules for selecting a transfer pricing method?
Given the requirement to read the legislation in a way that best secures consistency with article 9 of the OECD Model Tax Convention (OECD MC) and the OECD TPG, the United Kingdom currently follows the ‘most appropriate’ method approach set out in paragraph 2.2 of the OECD TPG (see the International Manual at INTM421010). Accordingly, the selection process should take into account:
Under paragraph 2.3 of the OECD TPG there is effectively a hierarchy of methods where one or more methods are equally reliable for the transaction in question: in such cases, a traditional transaction method is preferable to a transactional profit method, and a comparable uncontrolled price method is preferable to other traditional transaction methods.
Taxpayer-initiated adjustments
Can a taxpayer make transfer pricing adjustments?
The United Kingdom has a self-assessment system for income tax and corporation tax. The responsibility for making the assessment rests on the taxpayer and the amounts in the return are conclusive unless amended by the taxpayer or HMRC within the statutory time limits. A transfer pricing adjustment can only be made where there is a potential tax advantage for the UK taxpayer in the form of an increase to chargeable profits or a reduction of losses. Part 4 of the Taxation (International and Other Provisions) Act 2010 (TIOPA 2010) permits corresponding adjustments by claim in relation to UK–UK transactions only (see the International Manual at INTM412130). The mutual agreement procedure must be invoked in cross-border cases.
Safe harbours
Are special ‘safe harbour’ methods available for certain types of related-party transactions? What are these methods and what types of transactions do they apply to?
The United Kingdom’s transfer pricing rules do not usually apply to small or medium-sized enterprises (SME) (see section 166 of TIOPA 2010) although SMEs may elect to be subject to the rules and HMRC may direct that an SME apply them. The meaning of ‘small enterprise’ and ‘medium-size enterprise’ are based on the definition in the European recommendation 2003/361/EC (see HMRC’s International Manual at INTM412080). Transfer pricing rules will also apply to SMEs if the other affected person or a party to the transaction is a resident of a non-qualifying territory. Broadly, a territory qualifies (see section 173 of TIOPA 2010) if it is one with which the United Kingdom has a double tax treaty containing a non-discrimination provision and has been designated as such in regulations made by the Treasury.
Original article can be found here: https://www.lexology.com/r/UMhKVX4/0ac581cb62/VwcN
Joseph Hage Aaronson LLP’s (JHA’s) contentious tax team has contributed to the recently released Chambers & Partners Corporate Tax guide 2019. This highly regarded publication provides expert legal commentary on key issues and is considered one of the most comprehensive guides to this area of law for businesses worldwide.
As the only firm ranked as band one in the UK for Tax: Contentious expertise by Chambers, JHA is delighted to have contributed to this internationally renowned guide. JHA’s chapter includes sections on: the taxation of inbound investments; the taxation of non-local corporations; the taxation of foreign income of local corporations; anti-avoidance and BEPS, among other key features of UK corporate tax law.
JHA’s contentious tax team uniquely brings together in one firm specialist tax QCs, experienced tax disputes solicitors, and forensic accountants. The team’s close client relationships enables it to be involved in some of the most high-value and complex corporate tax related cases. JHA’s selection as the sole UK contributor to this guide, as well as the top tier rankings achieved by the firm every year since its inception in both the Chambers & Partners and Legal 500 directories, are testament to its practitioners talent and experience as well as its uniquely integrated approach.
The chapter can be found here on the Chambers website.
Ongoing controversy continues to surround the “Beautiful Game” as some 70 million documents (3.4 terabytes of data), remain the subject of investigation by journalists from members of European Investigative Collaborations (EIC).
The current report of the investigation relates to possible financial fraud in relation to the Financial Fair Play rule of the Union of European Football Associations (UEFA). This rule, approved in 2010, aims to prevent professional football clubs from spending more than they earn in the pursuit of success. The aim is to prevent clubs from doing this and then getting into financial difficulties that could endanger their long-term survival.
In December 2016 findings from the first files disclosed how some of football’s most prominent figures, including Cristiano Ronaldo and José Mourinho, avoided tax on some earnings through their use of offshore accounts. Since then, both European and national regulators have been questioning representatives of European football bodies about their tax structures.
The latest information released concentrates on the activities of Middle Eastern individuals and organisations who have become increasingly influential in football. So far they have focused on Manchester City, owned by Sheikh Mansour, deputy-prime minister of the UAE, and Paris St Germain, which belongs to Qatar Sports Investments.
The documents raise questions about the arrangements between these clubs and the football authorities regarding sponsorship deals and Financial Fair Play. They suggest the authorities may have dealt unevenly with the application of the sport’s rules, making it difficult for club owners to navigate these already complex regulations.
The investigators say that they will also be turning the spotlight on tax avoidance arrangements entered into by clubs and players.
JHA is a leading authority in contentious tax and commercial litigation, having achieved Band One rankings in both Legal 500 and Chambers & Partners for the fifth consecutive year. A significant part of its practice is devoted to football-related tax disputes involving clubs, players and agents.
Reports on the investigation can be found in DER SPIEGEL and Reuters.
Originally printed in Tax Journal on 30 September 2016.
Tax avoidance is now a headline-grabbing and career-threatening subject. But over seventy years ago, the highest court in the land told us that taxpayers are entitled to do anything legal to reduce their tax bill. How we have got to here from there is a journey driven by strong personalities reacting to major economic events, changes in tax rates and what until very recently was an ever growing tax avoidance industry.
Graham Aaronson QC (Joseph Hage Aaronson) presents a personal view of tax avoidance in the UK over the past 100 years, looking at the case law and legislation which developed in the first half century, and the social and economic context in which they evolved.
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