16th and 22nd January 2018
The Autumn Budget proposed some changes to CGT that could affect the real estate market in the UK materially and this event was another excellent example of AREF representing the collective voice of the real estate funds industry.
Following a brief introduction by AREF CEO, John Cartwright, Cathryn Vanderspar, Partner and Head of London Tax at Eversheds Sutherland and Leonie Webster, Partner at Deloitte LLP gave the background to and overview of the tax changes proposed by the government. They offered preliminary thoughts and suggested some potential issues and considerations that should be discussed.
We were reminded of the £billions that are invested in UK property using Jersey Property Unit Trusts (JPUTS) and the Guernsey and Isle of Man equivalents, from both overseas and domestic investors.
Tax changes to date haven’t affected the institutional property industry materially, unlike these current proposals to tax capital gains (CGT). Cathryn also set out what she believed the government’s aims were, the actual details of the proposed changes and the intended timeframe.
To further help the discussions during the roundtable session that was to follow, Leonie then ran through two interesting case studies for delegates (a UK fund structure and a pan-European fund) to highlight some important considerations and issues that need to be addressed, given the proposed tax changes.
It seems HMRC recognise the significant value of the real estate funds industry, so while the basic proposal is not negotiable, some of the details underpinning this clearly are. HMRC are inviting input to ensure all issues are properly considered and this consultation should be regarded as a genuine opportunity to seek changes where there are demonstrable issues. Feedback through AREF, before the 16th February deadline, preferably supported by circumstantial evidence, should lend greater weight, as numbers count when lobbying. Following the consultation, draft legislation is then expected summer 2018.
During the 40 minutes of vigorous roundtable discussions that ensued (each table chaired by a member of the AREF Tax Committee) delegates used six core questions as a framework to build their feedback around. The full detail of all the feedback is now with AREF’s tax committee and will feed into and form the body of the consultation feedback from the real estate funds industry to HMRC.
This is an abridged summary of this event. The full summary has been circulated to all AREF members and a copy is available upon request, please email email@example.com.