Substantial changes have been made to the profit fragmentation anti-avoidance since the original consultation was published. These rules apply to both individuals and corporates from April 2019. Businesses, including partnerships, with international aspects should consider whether they may apply and, if so, whether they need to take action.
EU Mandatory Disclosure Rules came into force on 25 June 2018 . This regime requires the reporting of certain cross-border arrangements that meet certain hallmarks. The rules are very broad so we expect that some disclosures will need to be made.
The new anti-avoidance rules on profit fragmentation apply from April 2019. They are designed to target abusive arrangements but the draft legislation is much wider. We believe that many normal businesses may need to notify HMRC of arrangements involving overseas entities under the new rules, even if it is clear that no extra tax will ultimately be due. We have brought this to HMRC’s attention but it is unlikely that any industry specific exemptions will be introduced.
When raising a new fund, one of the first questions to address is what’s the best structure? There are many moving parts to reaching a decision, not just concerned with tax!
The tax considerations surrounding co-investment changed significantly following the introduction of the Disguised Investment Management Fee (“DIMF”) legislation, which came into effect from 6 April 2015.
Changes to the tax rules mean that there are now strict methods to determine how UK investment managers are taxed on their income, gains and carried interest.
Members or UK limited liability partnerships (“LLP”) are taxed differently to employees. This resource sets out the basis on which profits are taxed, including in the opening years.
It is important to establish a fund vehicle that is subject to minimum taxation at the level of the fund and relatively simple to administer.
The salaried member rules are designed to ensure that LLP members who are essentially providing “employment-like” services are treated as “employees” for tax purposes.
The changes to the taxation of UK resident non-domiciled (“UK RND”) individuals came into effect from April 2017 and will impact the personal tax treatment of long term UK residents, as well as the some offshore structures such as trusts.
Most Private Equity funds include partnerships somewhere in their structure. Although for most relevant UK tax purposes the partnership is treated as tax transparent the tax rules associated with how profits should be shared should be important to many Private Equity managers.
This guide provides an overview of the UK self-assessment system for self-employed individuals and partners who are required to file UK tax returns.