Prudential technical manager Gerry Brown, whose career in tax and offshore financial services stretches back some 40 years, is retiring at the end of this month.
Like many tax experts, Brown started out with the Inland Revenue – as it then was called – as a graduate trainee, but went on to spend more than half of his remaining working life in the life insurance and investment product taxation fields.
During his years with such life companies as Aegon Scottish Equitable, Scottish Life International and Prudential, Brown forged strong ties with just about everyone he helped, remembers Aegon’s Margaret Jago, whose career in tax has paralleled his, and who, like him, lives in Edinburgh. They first met, she says, almost 25 years ago.
“One of the things I remember most is how much the intermediaries appreciated his highly-informed help,” she says.
“He used to take endless trouble to help them with queries, even when he’d been up till the small hours the night before playing chess. And [even now he] will still be in regular touch with many of them, and the life company sales people he met along the way.”
Brown was born and grew up in Northern Ireland, and graduated from Queens University Belfast in 1976. The Inland Revenue training that followed, he later would say, provided him with a thorough grounding in income tax, capital gains tax and corporation tax, as well as an education in the many judicial decisions on which the existing tax law infrastructure is based.
Destiny in tax
Not long after he left the Inland Revenue to train as a chartered accountant, he says, he realised that he was “destined to concentrate on taxation” for the rest of his working life, such was the nature of that training regime.
Brown’s move into the life insurance industry came in 1995, when he joined Scottish Equitable (now Aegon), as a technical consultant. Scottish Life International (now RL360°) followed, then, in 2007, the Pru.
Looking back over his decades in tax, Brown says one of the biggest changes has been about the way investment income is taxed, relative to earned income.
“When I started out, the prevailing political philosophy was that investment income should be taxed more heavily that earned income – those were the days of the “investment income surcharge”, an additional charge of 10% and 15% on investment income only.
“With the top rate of income tax being 83% at the time, the surcharge resulted in some individuals, with significant investment income, suffering tax at a rate of 98%!
“The election of a Conservative government in 1979 heralded a philosophical change, and resulted in the abolition of the surcharge and eventually, the introduction of Personal Equity Plans (PEPs) and Tax Exempt Special Savings Accounts (TESSAs).
“These have since transmogrified into the current Individual Savings Account (ISA), and of course we now have the personal savings allowance.”
Asked about the likelihood of a move to tax simplification, Brown looks as though you had just asked whether Father Christmas was for real, or whether there might be another vote on Brexit.
“A pipe dream!” he exclaims.
“We live in a complex world and, unfortunately, we need a complex tax code to cope with the many types of taxable income we encounter, and the many categories of tax relief that, in the widest sense at least, are theoretically available. We need a complex tax code to deal with international transactions.
“At the same time, the desire to combat tax evasion and tax avoidance has spawned page after page of legislation designed simply to gather information. We are not even yet at the end of the FATCA/CRS journey.”
As for the person he says he most admires in the offshore life assurance industry, Brown says it “has to be David Kneeshaw”, the UK-based managing director of RL360° and a former colleague of his at Scottish Life International.
“If management is getting things done through people, which I believe it is, then David’s approach, which is keeping informed and involved but not interfering, should be a template for all managers.”
As for the future of the industry, Brown believes it will involve “an epic struggle between multinationals and governments on corporate tax avoidance”. Ireland, Apple and the EU are already in the throes of a preliminary skirmish, he notes, possibly representing the first steps in a tax Game of Thrones.
“The Apple dispute [with the EU and Ireland] is the opening skirmish in a long war,” Brown says.
“I think tax developments will be concentrated in the corporate sector, leaving personal taxation relatively unchanged.”
Brown says he has no intention of reducing his involvement with tax in retirement, and that he is looking forward to having more freedom to express his personal views on the development of tax policy and tax administration.
“Taxation is a fascinating topic which impacts us all and should interest us all,” he says.
“I’ll certainly be involved in some upcoming HMRC consultations, and hope to continue writing on tax policy, at both a general and specific level.”