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U.K. Election and Taxes • C Corp Conversion • Gig Work Defense

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This is a weekend roundup of Bloomberg Tax Insights, which are written by practitioners featuring expert analysis on current issues in tax practice and policy. The articles featured here represent just a handful of the many Insights published each week. For a full archive of articles, browse by jurisdiction at Daily Tax Report, Daily Tax Report: State, and Daily Tax Report: International.

This week we look at what the U.K. election means for taxes, private equity fund entity choice, California’s new worker classification law, multilateral v. unilateral digital taxation, and good deeds with opportunity funds. We’ll hear from:

Paul Falvey of BDO U.K. on what the election means for U.K. taxes

Jeremy Swan, Jonathan R. Collett, and Robert Richardt of CohnReznick LLP on private equity C Corp conversion

Christopher Karachale and Nancy Dollar of Hanson Bridgett LLP on a potential defense to the California classification law

Duncan Edwards of BritishAmerican Business on unilateral v. multilateral digital services tax solutions

Christopher Hanewald of Wyatt, Tarrant & Combs LLP on finding the good in opportunity zones

Boris Johnson, U.K. prime minister, delivers a speech outside No. 10 Downing St. in London on Friday, Dec. 13, following the general election.

Photographer: Chris Ratcliffe/Bloomberg

The Conservative Party has won the 2019 general election. Paul Falvey of BDO U.K. discusses what this means for U.K. taxes. How bold will the new government be? Read: What the Election Result Means for U.K. Taxes

Since enactment of the 2017 tax law, some large private equity funds have converted from publicly traded partnerships to C corporations. Jeremy Swan, Jonathan R. Collett, and Robert Richardt of CohnReznick LLP look at whether conversion makes sense for middle-market funds. Read: What Middle-Market Private Equity Funds Should Know About C-Corp Conversions

California’s new worker classification law—intended to restrict the classification of workers as independent contractors—goes into effect on Jan. 1. Christopher Karachale and Nancy Dollar of Hanson Bridgett LLP analyze a potential defense raised by technology platform companies, which argue they are third-party payment intermediaries and not employers. Read: IRS Form 1099-K in the Technology Platform Defense to California AB 5

Several countries have enacted or proposed a digital services tax on such firms as Google and Apple. Duncan Edwards of BritishAmerican Business says these unilateral measures are the wrong solution to a genuine problem and stresses the need to pursue a multilateral agreement. Read: Taxing the 21st Century Economy—A Multilateral Approach?

The opportunity zone program has fans and critics. Many of those fans are among the affluent and their advisers. While the program has received some deserved criticism as a way to make the wealthy wealthier, it is also a significant opportunity for local nonprofits, economic development organizations, and local governments to shape an incomplete program into something transformational, writes Christopher Hanewald of Wyatt, Tarrant & Combs LLP. Read: Impact Investing and Finding the Good in Opportunity Zones

From the Archive

Bloomberg Tax contributors have stayed on top of the twisted tale of Brexit from the beginning.

With the U.K.’s departure from the EU having been postponed for a third time, until Jan. 31, 2020, James Ross, of McDermott Will & Emery, considered whether the Brexit fog is now finally about to lift.

Clive Jie-A-Joen and Monique van Herksen listed some transfer pricing aspects companies may want to consider while they are making (last-minute) Brexit-triggered decisions.

Beyond Tax

What’s happening outside the world of tax?

Litigators can learn about good legal writing from a recent New York Times review giving zero stars to Brooklyn’s Peter Luger Steak House. Boies Schiller Flexner LLP’s Evan North says litigators who contend with audiences ranging from neutral to hostile should take the same approach as the review and catch and release all but the most compelling legal arguments. Read: What a Peter Luger Steak House Review Can Teach Lawyers About Effective Legal Writing

The global growth of cryptocurrency paves the way for an expanding legal practice around regulatory and investigations work. FTI Consulting’s Steve McNew has seen the growth first hand and examines the most common types of legal cases, illicit activities, and other issues emerging around cryptocurrency. Read: Crypto Advancements Stir Legal Work in Investigations, Asset Tracing

Decades after their debut, MS Word and email are still used by law firms for contract management. Olga V. Mack, CEO of ParleyPro, explores the opportunities contract management software (CMS) can bring to law firms and legal departments willing to understand its core technologies enabling real-time access, artificial intelligence, and blockchain capabilities. Read: Beyond MS Word—Three Technologies Transforming Contract Management

Law firms need to protect against cyber attacks. OpenText legal and data experts offer steps to take and warn a key concern is that a breach may violate the professional and ethical obligations lawyers have to protect privileged client information from unwanted access and disclosure. Read: Four Steps Law Firms Should Take to Reduce Cybersecurity Risks

Jane Fogarty, vice president and global counsel at SYNNEX Corp., explains why it’s important to listen to and address whistleblower complaints, especially for global companies. She walks through some decisions SYNNEX made when upgrading its internal review program. Read: How a Global Company Embraces Internal Whistleblowers

The director of the U.K.’s Serious Fraud Office, Lisa Osofsky, has made clear her goal of increasing U.S.-U.K. cooperation in investigating and prosecuting complex international financial crimes. Timothy J. Coley, counsel with Buckley LLP, says increased cooperation between the SFO and U.S. law enforcement agencies like the Justice Department and the SEC’s Division of Enforcement would be mutually beneficial. Read: Stronger Transatlantic Cooperation Could Be Boon for DOJ, Ailing U.K. Serious Fraud Office

Public comments on proposed CFIUS regulations are in, and final regulations must take effect by Feb. 13, 2020. Kirkland & Ellis attorneys look at the issues raised by industry trade groups, foreign government agencies, and law firms about their potential breadth, perceived ambiguities, and gaps, and highlight areas where more clarification and guidance is needed. Read: Proposed CFIUS Regs Draw Questions on Foreign Investment Definitions, Enforcement

Exclusive Content for Bloomberg Tax Subscribers

(*Note: Your Bloomberg Tax login will be required to read the following content.)

Kim Blanchard of Weil, Gotshal & Manges looks at whether treating a domestic partnership as an aggregate causes small U.S. partners to become subject to the passive foreign investment company (PFIC) regime.

The weekend roundup of Bloomberg Tax Insights will take a break for the holidays and return Jan. 4.

Bloomberg Tax Insights articles are written by experienced practitioners, academics, and policy experts discussing developments and current issues in taxation. To contribute please contact Erin McManus at emcmanus@bloombergtax.com.

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gig workers: Gig workers are super heroes who keep neighbourhoods connected

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BENGALURU: Partnerships between governments and private businesses including Ola, Flipkart, Swiggy, Urban Company and Uber among others are playing a crucial role in the fight against Covid-19, according to a report published by Ola Mobility Institute (OMI).

The report highlights the contribution of gig workers to the ongoing fight against the pandemic and collaborative measures that have been taken globally and in India to protect those on the frontline. “Gig work constitutes essential public services and adds tremendous value to local economies, putting money in the hands of people on a daily basis. However, this does not make them immune to the economic effects of the outbreak,” the report said.

OMI urged the government and businesses to necessitate large-scale economic and financial interventions for gig workers who have been instrumental in keeping people safe and the economy running in these trying times.

“Under these extraordinary circumstances, gig workers and platform companies are adapting quickly and leveraging their workforce to ensure transportation services, delivery of essential commodities and medicines are available to the most vulnerable populations,” Carson Dalton, Senior Director at Ola Mobility Institute, said.

The report also highlighted the policy measures taken by governments globally — from fiscal and monetary policies such as unemployment benefits, tax relief, and targeted liquidity provisions, to lending and financial support — to minimise the human and economic impact of Covid-19 and particularly protect the self-employed, gig workers and small businesses. “These collective efforts built on a strong foundation of social partnerships will pave the way for a brave new world — a world that is resilient,” the report said.



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Coronavirus Lockdown Puts the Squeeze on San Antonio Gig Economy Workers

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DLLU / WIKIMEDIA COMMONS

Seen any Uber drivers around lately?

Chances are you haven’t. In this climate of social distancing, not many folks want to pile into a car and sit a couple feet away from a stranger.


That has spelled problems for San Antonio’s gig economy. One ride-share driver who declined to give his name said he’s witnessed a 75% decrease in rides during off-peak hours. Work during peak hours has dropped in half.


A recent Business Insider survey of more than 1,000 ride-share workers corroborated the downturn. Its numbers were even more bleak, however, putting the decrease at as much as 80% nationally.




It’s unclear exactly how many San Antonio workers rely on ride-share driving and other app-based employment. However, the Bureau of Labor Statistics estimated in 2017 that a third of all U.S. workers drew paychecks from the gig economy. BLS predicted that number would rise to 43% in 2020.


The decline in ridership has created a market correction that’s pulled local drivers off the road and forced them to seek other income.


“There’s no money out there for ride-sharing,” said another driver who requested anonymity. “People sit and wait at the Uber pool at the airport and need to drive so far away to grab people. It’s not even worth it.”


While it seems like delivery services such as GrubHub and DoorDash could offer a quick pivot, local drivers say those aren’t accepting new drivers. One shared a screen capture of a message from DoorDash saying it’s not looking for new delivery drivers but promised to email once that changed.


According to the Texas Workforce Commission, self-employed residents affected by the outbreak may qualify for benefits under the Federal Stimulus Bill. It urged affected workers to call it at 800-939-6631 or visit its website to apply for benefits.


However, with more than half a million Texans filing unemployment claims in the last 18 days, TWC’s phone and computer systems have been overwhelmed, leading to busy signals and website crashes.


But there’s been a bit of good news for local gig workers.


Some say they successfully switched to food delivery and are offsetting their losses. A handful reported that by driving for Uber Eats, they’ve even seen an upswing in traffic.


One driver who declined to be named said he’s between jobs and is pulling in decent income driving for Favor. Among Favor’s perks are guaranteed pay if he has works a specific number of hours and an incentive program increases his pay for the weekend.


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Here’s what we know about new unemployment aid program for self-employed, gig workers – Pittsburgh Post-Gazette

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