 My name's Peter Harris and I take the corporate tax model in the MCL and I've been teaching corporate law and corporate tax law for a long, long time, more than 20 years and this particular course is sort of based on something I have been teaching in various countries. It's not just, you know, actually I haven't really had the opportunity until the MCL started to teach this sort of course here in Cambridge so I've been teaching it for about 15 years and I won't bore you with anything further but I do act as an external consultant for the IMF and I'm an assistant developing countries in drafting tax laws and that sort of adds to the sort of perspective of where I actually come from on these issues. I, you know, we're going to concentrate here not on the detail but on the big picture yeah and I want to get that across clearly because say the word corporate tax and people can get a bit scared, you know, this is, this is, there's certainly not any, any needs to have any existing knowledge here with respect to taxation itself where if you have some that's fine if you don't it's not necessary rather what I'm more interested in and what I think is more important is what you're actually here for which is that you have some sort of basic knowledge of corporate law and especially because of the nature of corporate tax you know some basic financing techniques and stuff you know in corporate law, in the corporate field so that's, you know, that's from there what I want the purpose of the course to be as it says in the course outlaw is to just look at the way in which corporate law actually impacts on corporate behaviour and corporate decision making. I don't have to tell you I suspect how topical that is at the moment especially in the context of what's been going on with the multinationals that you know we won't get to that level of detail although I do sort of teach that sort of stuff in a general course in the LLM so we can talk bits and pieces on the side about the multinationals and what's been going on and shifting profits all around the place rather what's more interesting from this perspective I think is the way in which the corporate tax laws themselves have actually influenced the process of the actual decision making in the context of the actual boardroom. Recently you know the last POOHA which is much closer to sort of what this course is about has been the Tax Justice Network who is one of the pressure groups who started all the sort of publicity about the multinationals not paying enough tax and all the public inquiries in the US and the UK that have been going on about this. They've actually also released a paper which says that for example directors have no fiduciary duty to their company to minimize their tax. That's a quite nice controversial thing to say isn't it. So at least in the tax area there's a bit of discussion about whether that's right or whether that's wrong or how that should be approached but one thing is absolutely clear is that at least from the revenue authorities perspectives there is certainly a lot more push to get tax on the agenda in the boardroom that one is absolutely clear and it's nearly about not the end of the day all comes back to risk profile I think more than anything and what the companies are willing how much risk they're willing to take with respect to their tax profile. Anyway how we actually are going to approach this course well as I've said the idea is to focus on the actual decision making how tax impacts on decision making and behavior of companies and so we're going to actually structure it around or at least focus on particular corporate law issues yeah and their tax consequences that's that that's the idea. The thing that we do not do in this course at all is focus on generic tax issues things that are just generic to profits taxation which is what we actually focus on yeah and so we always are picking up sort of areas of corporate law where there's a question as to whether or not tax law actually accepts the corporate law approach or it doesn't. The bottom line with tax law is it's one of the reasons why it's so complicated is that if you are going to attach tax consequences to the behavior of companies or individuals or anything for that matter then of course you have to have a framework in which to analyze what's actually happened in so you can characterize it for tax purposes. Rightly or wrongly tax law has to start with the general law position yeah you can't rewrite in a tax law the entire law of the whole country for tax purposes yeah you have to accept that you know an employee is as you actually define it for employment purposes a company you start with the question a company is as you would define it for corporate law purposes a dividend is what you would say it is for corporate law purposes a share is what you would say it is for corporate law purposes the complications with tax law is that it then starts to question whether or not those general law rules and characterizations are acceptable for tax purposes and so we are forever questioning and corporate law is is probably the worst case scenario of this and this is why tax laws get so complicated is because the tax law just does not accept the corporate law position and it moves on from it yeah and and so it's there is this sort of you know interface and clashing between corporate law and tax law and that's what this course is about it's about that interface and the extent to which tax law actually does not accept what you might find is a standard treatment for for corporate law purposes i'll come back to some specifics about that in a minute but that's what it's about and i think what we're going to do is we focus around some basic problems i think there's about seven problems just to keep our attention focused and we just use those as discussions in class and that's what we actually focus on within that context we the course then takes a comparative approach and that sort of just is because of you know what i'm used to teaching anyway and it also explains that we are going to keep it at a pretty high level so we're not going to get bogged down in too much detail it'll get complicated anyway but you know we won't descend into so much detail that we can't get back out again so we're going to look at the comparatively the u.s the uk and germany yeah and they're the three countries that actually they have sort of archetypal systems within tax law in the sense that most countries around the world have a system that looks like one of their systems yeah that's and so that's what we're going to that's that's the general approach um so um within that down to more specifics the main theme of the course is no surprise corporations of course and why you're here is because you know they are artificial at some level and it's exactly that problem that is the critical thing in tax law and that's when tax law starts to you know the big question for this course is when does tax law effectively list the corporate filing whole law in part or or it just doesn't accept that the corporation is entirely separate that is those are the big questions in tax law and then the things we're going to focus around and there are three primary artificialities here for tax law purposes yeah and the first one is when a corporation derives income is the tax law really going to believe that that's the corporation's income now some definitional problems here you know how does the tax law define what a corporation is or a company is depending on the terminology um and uh and and what's the relationship between the general law characterization that's one issue that's not really the issue we're going to focus on but we have to start there second one is how does it actually calculate its profits you already have to in most countries at least for some purposes report profits and usually according to accounting principles how does the tax law interface with that legal requirement under corporate law um and to what extent are those accounts actually accepted or not and again just the general law approach you know what's the relationship between accounting treatment and the actual tax law so we look at that there's a lot of difference of approach between the three countries in that which gives us a good feel for how countries approach this um and then then then finally what the thing I want to concentrate then is the area where we see the biggest questioning of the separate identity of of corporations in tax laws when we get to corporate groups um and so uh we want to then have a look at corporate groups and we want to actually have a look specifically at how the tax law treats corporate groups one thing just to give you one very clear example there is no such thing you were just not going to take the consolidated accounts and treat them for tax law purposes as the accounts of one single consolidated entity for tax purposes that just didn't happen in any country at all so that's a good example of how you can actually divorce or what the sort of questions are about the relationship between corporate law and the and the obligations that come on the corporate law and tax law and that's that's what we're about um that the second artificiality is when a company starts to distribute dividends um you know dividends are very different from other sources of income in tax law because they were already a source of income they were the corporation source of income and yet bizarrely every country says that dividends are a separate source of income from the corporation's actual profits um even the word dividend to divide says that that's not true uh so you know how does the tax law number one define what is a dividend and what is not because that's uh absolutely critical in calculating the corporation's income so we get into the whole debt equity sort of issues there how do you distinguish between debt and equity and again we're going to see every tax law has something to say which is not consistent with general law they override the general characterization of shares or or debt and they will tell you that something that is actually a share is debt or vice versa yeah um and they won't accept the general law characterization so you know we're going to look at the approaches there again not getting too much detail but but look at the actual issue that's one issue with respect to the distribution of dividends the second one is the double taxation issue the corporation's profits were already taxed have a dividends taxed yeah that just shows very clearly the artificiality of the corporation and you know the question is then what does the tax law actually do about that what we call economic double taxation yeah taxation of corporate profits and taxation of the dividends so that's a second I officially so corporation as an entity that derives income is one just questioning the actual separate personality of the corporation the separate identity of dividends as an actual source of income that's number two the third artificiality that we actually focus on not surprisingly are shares as a separate asset from the assets of the corporation themselves we get this you know crazy sort of you know if you if you're familiar with corporate law and you've heard of the problem of duplication of loss you know for recovery purposes you know recovery at the corporate level as well as do you have a shareholder action to recover for a wrong done as well and we you know some countries have talked about the duplication you can't recover twice you can't recover at the corporate level and at the shareholder level at the same time for the same wrong that's being done I can promise you that is nothing compared to what happens when you get into tax law because in tax law all of the assets are duplicated yet all of the assets at the corporate level are duplicated in the value of the shares and the tax law is opposed even though one of the tied together you know the valuation is tied together the tax law has to actually track both assets and make sure that there's not a lot of manipulation going on here and if you start to create corporate chains that just gets worse and worse and worse you know the classic scenario I will give you is where somebody starts out with a hundred pounds of dollars worth of cash contributed to a company now there's two assets the shares worth a hundred and the actual company still got the hundred in cash that company then contributed in return for shares to another company so you've got another hundred dollars worth of cash and it just goes on and on and on and the tax law has to track all of these different types of assets which just reflect each other when really there's only one hundred cash in the first place that's the only asset there actually is so you know again you know all this does is just re-emphasize once again the artificiality of corporations and the interests in them and then the question is how does the tax law actually respond to these artificialities and I can just say I promise you they just don't follow corporate law because if they did they would just get you know the tax system would be worse than it actually is now yeah so they're the sorts of issues that we will be following I think for more detail you can actually look in the materials in the handbook and it gives you a better better break the classes are I think a little bit different from other classes because I actually do this in four four-hour sessions because actually just because I could once the MCL started but also I think it's really interesting I do actually longer sessions in some other universities than four hours and actually last year's four-hour sessions work really really well and what they do is they give you continuity they give you an ability to start and then not have to stop discussion and any you know after four hours everybody's exhausted anyway but you know it does give you that sort of continuity and that flow so we start on the 20 on 25th of October and then we run for four weeks from there and I think that sort of timing this year it works a lot better than it did last year because then you've got 28 days before the exam so we finish on the 15th of November there's time for a revision session at some point which will negotiate when we do that and then it's onwards to the exam on the 12th of December the exam is an open book and there will be four questions and you have to answer two in two hours that's it's the same format as last year look at the format on the on the on the web page for the subject and the last year's exam it'll be the same you won't get a question on any on the specifics of any particular country's tax system that's not what the nature of the course is about it's about you understanding the manner in which tax law can impact on corporate law decision making there is a text and that's really easy and essentially this text is the historically it's the verbatim production of my lecture notes for the subject and more yeah so you don't really need anything more than this text and in addition you can take this text expressly into the actual exam with you yeah so this is not about and there's no memory element in this this is just going to be about it and if you do the reading you'll get the most out of this course if you do the reading before the class and then that enables us to do a lot of discussion in the class and just check exactly how much did you understand which are the more important bits and which bits are not yeah so so that's that's what you need there is you know of course you can take some slides and hand out some reading lists and stuff into an opening book exam as well I think I'll leave it at that I mean there's you know all the usual questions do I need to know any tax I think I've answered that is it hard well I'm going to take it as gently as possible and how would you find out more well have a look at the have a look at the I've already uploaded some of the slides in the reading list to the web page for this subject and there is also the introductory first 16 or 17 pages from this book that's actually there electronically which you can have a look at and if you try and help you make your decision and of course if you've got well I take questions now I'll just answer any questions it's coffee right if you're here to copy then why not so then Peter Peter can just move on yeah let's do that so I'll answer any questions a couple