Ed Denny

Partner

London


Read full biography at www.orrick.com
Ed Denny is head of Orrick’s London tax department. Ed supports domestic and cross-border corporate and finance practices. He focuses on the tax aspects of corporate finance transactions and structures, including mergers and acquisitions of public and private companies. Ed has a particular interest in international tax issues and the technology sector.

Ed was selected by Tax Journal as one of its "40 under 40" list of the UK’s leading young tax practitioners, and has undertaken secondments in the past with the international tax groups at HSBC and Vodafone.  Ed advised Canal+ on the sale of its interest in Poland's TVN group which was awarded 2016 European Joint Venture Tax Deal of the Year at International Tax Review's European Tax Awards.

Clients say the following about Ed:

"Ed exerts a calming influence on those around him which inspires confidence in his ability to deliver - which he does"

"He puts his knowledge and skills to work for the client and is always thinking of possible solutions"

"His technical memoranda are usually full of different alternatives, but which differentiates him from most advisors, these are in every case feasible and realistic"

Representative transactions include:

  • Studio Canal's acquisition of Paddington Bear IP rights;
  • Canal+ Group's sale of its interest in Poland's TVN group;
  • BP's sale of its LPG bottling business in the UK, Netherlands, Belgium, Portugal, South Africa, Poland, Turkey, Austria and China;
  • HSBC’s £12.5 billion underwritten rights issue;
  • Iberia’s £4.4 billion merger with British Airways;
  • AXA’s £2.75 billion disposal of its UK life insurance business;
  • Delta’s acquisition of a £220 million stake in Virgin Atlantic;
  • BNP Paribas’ acquisition of the fund management arm of Credit Suisse creating a business with combined assets under administration of $231 billion.
  Ed publishes regularly in Tax Journal, PLC Magazine, BNA International and Financier Worldwide.

Posts by: Ed Denny

HMRC Publishes UK Tax Guidance on Cryptocurrency for Individuals

On December 19, HM Revenue and Customs (“HMRC”), the UK’s counterpart to the US Treasury, published long-awaited (and arguably long overdue) guidance on the taxation of cryptocurrencies (which it refers to as “cryptoassets”), building on the UK government’s Cryptoassets Taskforce’s report that was published last year. This guidance is welcome in an area of law that needs to play catch-up to apply to income and gains on technology and digital assets. It is important to note that this guidance is limited to HMRC’s view in relation to individuals holding cryptoassets and does not extend to tokens or assets held by businesses. However, HMRC states its intention to publish further guidance in relation to the taxation of cryptoasset transactions involving business and companies sometime in the future.

The guidance confirms that HMRC does not consider cryptoassets to be currency or money for tax purposes and separates cryptoassets into three categories of “tokens”: exchange tokens, utility tokens and security tokens. This guidance focuses on the taxation of “exchange tokens,” a term encompassing assets such as Bitcoin, which presumably it considers to be the most prevalent and widespread. The approach is very similar to the IRS’ approach in this area in Notice 2014-21. HMRC considers that in the “vast majority” of cases, individuals hold (and acquire and dispose of) cryptoassets as part of a personal investment and will, therefore, be liable to capital gains tax. The analysis of whether the cryptoassets are held in the nature of a trade or an investment, and the consequential tax treatment, will largely follow the existing approach and case law but HMRC only expects individuals to be buying and selling cryptoassets with such frequency, level of organization and sophistication such that it amounts to a financial trade in itself in “exceptional circumstances”. If, following the application of the traditional analysis, the cryptoassets are considered to be held as part of a trade, then the Income Tax provisions will take priority over the capital gains tax provisions.

Individuals will be liable to Income Tax (and national insurance contribution, where appropriate) on cryptoassets which they receive from their employer as a form of non-cash payment (and which may be collected via withholding tax) and/or in return for “mining” the cryptoassets, “transaction confirmations” or “airdrops” The guidance describes these transactions and the applicable taxes. As discussed in the guidance, miners are the people that verify additions to the blockchain ledger. They may receive either cryptocurrency or fees for this function. An airdrop is where someone receives an allocation of tokens or other cryptoassets, for example as part of a marketing or advertising campaign in which people are selected to receive them. As pointed out in the guidance, while the receipt of cryptoassets is often subject to the income tax, appreciation will be subject to capital gains tax upon disposition.

In addition to the tax analysis, HMRC points out that cryptoasset exchanges might only keep records of transactions for a short period, or the exchange might no longer be in existence when an individual completes their tax return. The onus is, therefore, on individuals to keep separate and sufficient records for each cryptoasset transaction for the purposes of their tax records.