The LCN Legal Podcast

Paul Sutton talks to Mick Edmondson, who specialises in the project management of complex cross-border restructurings, including legal entity reduction / corporate rationalisation and digital transformation programs. They look at how to manage large-scale projects so that they deliver the intended results, the different methodologies that are appropriate in different situations, and some of the technology and tools that are available. Paul and Mick’s discussion covers: The definition of a project, and what distinguishes this from ‘business as usual’The cost / benefit analysis of devoting time and resource to project management, as opposed to ‘just getting on with it’The crucial importance of bringing together all the key stakeholders at the start, and getting top-level buy-inA basic framework process that helps to avoid common pitfallsSome potential consequences of not completing each stage before moving on to the nextThe main project management methodologies, and when each is appropriateThe key questions that a Head of Tax should address when considering starting a significant project Some of the technology tools that are available, and how to use them most effectivelyKey takeaways for people who are contemplating a large or complex project.

Paul Sutton talks to Sam Barrett – Managing Director, Americas Operating Model Effectiveness, which is part of the International Tax practice at Ernst & Young LLP – about operating model effectiveness and global value chain projects. What are they, what do they try to achieve, and how can they be implemented successfully?Paul and Sam’s discussion covers: ·       What operating model effectiveness aims to achieve, and how·       The typical drivers behind operating model effectiveness and global value chain projects ·       How the tax and transfer pricing teams should be involved·       The role of non-tax functions such as IT, HR and Legal·       General principles and methodologies that can be applied·       How to make sure that, after implementation, projects have actually achieved the intended results·       The main challenges for multinational groups’ tax functions over the next year·       Key takeaways for heads of tax and their advisers.

Paul Sutton discusses the concept of Pareto optimality and its practical application in transfer pricing with Philippe Penelle, a Ph.D. economist with 25 years of TP experience. Philippe specialises in the valuation of intellectual property and the pricing of contractual contingent and derivative provisions. He is a former leader of the Washington National Tax Transfer Pricing Office of a Big Four Accounting Firm, and a member of the board of the National Association for Business Economics Transfer Pricing Symposium held annually in Washington, DC. Paul and Philippe discuss: What ‘Pareto optimal’ means in the context of controlled transactionsThe related concept of ‘moral hazard’, and how it featured in early OECD discussions regarding the BEPS projectThe implications for the four steps required when applying the arm’s length principle, including the role of agreements in substantiating Pareto optimalityExamples of transaction types for which the concept of Pareto optimality can create great clarity Examples of how Philippe has used this concept to achieve better outcomes for his clients in transfer pricing challengesKey takeaways for heads of tax and transfer pricing practitioners when designing transfer pricing policies.

Paul Sutton and Borys Ulanenko discuss the role of AI in benchmarking for transfer pricing, including the practical problems that AI can address, how AI can help TP professionals to demonstrate that their benchmark analyses are robust, and some common misconceptions around the use of AI. Borys is the founder of ArmsLength.AI. This platform introduces AI solutions to complex tax challenges, streamlining data analysis and enhancing decision-making accuracy. Before ArmsLength.AI, he worked at Aibidia, focusing on digital solutions in the same field.  Paul and Borys discuss: The problems inherent in the benchmarking processThe challenges that TP professionals face when creating benchmarking analysesThe role of AI in addressing these issuesReal-world examples of how AI can make benchmarking analyses that are more robust, and demonstrably soExamples of what ArmsLength.AI does for its clients, and its pricing modelsCommon misconceptions around the use of AI, and what people should consider when assessing any AI tool on the market.

Paul Sutton talks to Sue Bonney, an independent ESG adviser who works with senior people in some of the UK’s largest and most important organisations. In that role she helps business leaders to shape strategic responses to the responsible business agenda and ESG.Paul and Sue discuss: Four ‘lenses’ through which to view ESG issuesThe right way to approach ESG in order to see tangible and useful resultsHer view on ESG scores, and in what respects they can be meaningfulThe relationship between ESG and the standards of tax governance which tax administrations such as the ATO require from corporatesA specific example of a tax strategy statement published by a large corporate which Sue regards as well thought-outKey areas for action that Heads of Tax should considerWhat a ‘targeted intervention’ to help large corporates with their ESG might look like.

The book, ‘Intercompany agreements for transfer pricing compliance: a practical guide’ was first published in March 2019. A revised edition will be published in September this year. Paul Sutton talks about the reasons for writing the original version, the cases and developments since then which have prompted the update, and how the new version will be different. Paul explains: Who the book is forWhat it is trying to achieveHow the transfer pricing world (and the role of intercompany agreements) has changed since 2019The cases and other developments which the new version will coverOther differences between the updated and original versions of the book.