On 10 February 2022, HM Treasury published their Summary of responses to the Call for Input on the Government’s review of the UK funds regime. In the Call for Input they sought feedback on issues across both tax and regulation. This included enhancing existing fund structures and a commitment to looking at ways to introducing new ones such as the Professional Investor Fund (renamed the Reserved Investor Fund), proposed by AREF, and the Long-Term Asset Fund put forward by the IA. The changes to the UK funds regime included AHCs and REITs reforms which took effect from 1 April 2022.
AREF’s response to the Call for Input can be found here.
HM Treasury's Summary of responses included:
Professional Investment Fund (PIF) - Renamed the Reserved Investment Fund (RIF)
Following positive feedback, HM Treasury are keen to progress the development of an unauthorised contractual scheme with a view to holding real estate.
VAT
VAT zero-rating will not be consulted on as part of the VAT in Fund Management Review due to the fiscal environment.
OPF / New Unregulated Funds
Given that VAT zero-rating is a key prerequisite for any Onshore Professional Regime this work has been parked until after the VAT in Fund Management Review.
‘Balanced Funds’ / UK Corporation Tax
HM Treasury are cognisant of the ‘balance fund issue’ and Corporation Tax leakage. They are keen to consult on how a deemed deduction or exemption model would function.
TEFs/Streaming
HM Treasury recognise that TEFs or a rebalanced Corporate Streaming solution would not be popular.
Treaty Access
Any changes to the Authorised Fund Tax Regime could have an impact on treaty access.
REITs
HM Treasury are prepared to address unnecessary barriers and complexity within the rules for REITs.
Partnerships
HM Treasury will not be looking to make any changes to the LP Regime at this time.
Qualified Investor Scheme (QIS)
FCA are considering what, if any, of the additional proposals concerning the QIS they will take forward while taking into account their wider organisational priorities, including consulting on broadening the distribution of the LTAF to a wider subset of retail investors.
Events
IA meeting with the FCA 2 August 2022 re. Proposed reforms to QIS rules
AREF members were invited to a online meeting the IA are holding with the FCA on 2 August to discuss possible enhancements to the QIS regime. More details can be found here
AREF webinar 4 March 2022
Thank you to those who joined our virtual event on Friday 4th March 2022 on the UK Treasury's Response to the Funds Regime Review Call for Input. It was a popular session with over 160 people registered to attend.
You can find out more about this event, and watch the recording here.
AREF’s Tax Committee and Public Policy Committee are overseeing this review and AREF’s leads are Chris Hewitt, Tax Adviser (chewitt@aref.org.uk) and Jacqui Bungay (jbungay@aref.org.uk), Policy Secretariat
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