UK Hedge Funds Electrnic Newsletter

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UK Hedge Funds Electrnic Newsletter

  1. 1. Investment Management & Real Estate Rain or shine?* Alternatives Investment Funds Electronic Newsletter Close document Previous page Next page Contents Print November 2007
  2. 2. Alternatives Investment Funds Electronic Newsletter // November 2007 Contents Click on the links below to navigate through the document Close document Previous page Next page Contents Print Click on the links below to navigate directly to each article Flat rate for capital gains tax – Pre-Budget Report 2007 Implementation of the CRD and ICAAP Dutch tax regime adapted for alternatives Securitisation in the UK Commodities trading and VAT Consultation paper on offshore funds Working late? Taxation of non-domiciled partners – Pre-Budget Report 2007 Income tax shelters – has anti-avoidance effectively closed the market? Proposed changes to the investment manager exemption Changes to rules for claiming non UK tax residence ‘PricewaterhouseCoopers’ refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
  3. 3. Alternatives Investment Funds Electronic Newsletter // November 2007 Flat rate for capital gains tax Close document Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Richard Hutchinson +44 (0)20 7212 8403 and Mark Waddilove +44 (0)20 7213 5786 Read this article Previous article Skip article
  4. 4. Alternatives Investment Funds Electronic Newsletter // November 2007 Flat rate for capital gains tax Close document Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Richard Hutchinson +44 (0)20 7212 8403 and Mark Waddilove +44 (0)20 7213 5786 The UK government has announced in its Pre-Budget Report As the changes are to have effect from 6 April 2008, there that it will replace the three current capital gains tax rates may be some opportunity to restructure the terms of current (10%, 20%, and 40%) with a single rate of 18%, effective and past transactions to mitigate additional tax cost, but there 6 April 2008. This change only applies to individuals may be commercial constraints on what can be achieved. and trustees. The proposed changes in the legislation are not published yet The rate change will be accompanied by the abolition of both and it is therefore uncertain whether anti-avoidance legislation business asset taper relief and taper relief for non-business will be introduced. However, individuals must start to consider assets and the removal of the indexation allowance for assets whether it is better to crystallise the tax charge at a rate of owned since before 1998. 10% now (assuming that full business asset taper relief has been obtained) or defer it but suffer tax at a rate of 18% or a The loss of business asset taper relief will increase the higher rate for assets owned since before 1998 because of effective rate of capital gains tax payable by individuals who the removal of the indexation allowance. sell shares after 6 April 2008, including those who acquired shares in the expectation that business asset taper relief would be available in the next two years.
  5. 5. Alternatives Investment Funds Electronic Newsletter // November 2007 Implementation of the CRD & ICAAP Time is running out for the implementation by hedge fund managers of their ICAAP, the Internal Close document Previous page Capital Adequacy Assessment Process. Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Jonathan Howland +44 (0)20 7212 5811 Read this article Previous article Skip article
  6. 6. Alternatives Investment Funds Electronic Newsletter // November 2007 Implementation of the CRD & ICAAP Time is running out for the implementation by hedge fund managers of their ICAAP, the Internal Close document Previous page Capital Adequacy Assessment Process. Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Jonathan Howland +44 (0)20 7212 5811 From 1 January 2007, the rules governing regulatory capital • Conduct stress and scenario tests; changed as a result of the implementation of the Capital • Ensure that its processes, strategies and systems required Requirements Directive (‘CRD’). The CRD itself was by the overall Pillar 2 rule and used in its ICAAP are both implementing across the EU the measures of the revised comprehensive and proportionate to the nature, scale and Basel framework (‘Basel II’). The new rules are mandatory complexity of the firm’s activities; and from 1 January 2008. • Document its ICAAP. Under Pillar 2 of the CRD, all investment firms caught within the scope of the CRD must have an ICAAP. It is intended to The size and complexity of firms will alter their ICAAP ensure that investment firms hold internal capital that is requirements but it does not necessarily require additional consistent with their risk profile and strategy. The process capital. Many firms have found their capital resources obliges investment firms to: under Pillar 1 (‘Capital Resources Requirement’ or ‘CRR’) adequately meet any risks identified in their ICAAP, but this • Carry out regular assessments of the financial resources cannot be assumed. The FSA expects senior management that it considers adequate to cover the nature and level of to be involved in the ICAAP process, devoting sufficient time risks to which it is or might be exposed; and resources to its production. It has already provided • Identify the major sources of risk to its ability to meet its feedback on many firms’ submissions and not all have met liabilities as they fall due; its expectations.
  7. 7. Alternatives Investment Funds Electronic Newsletter // November 2007 Dutch tax regime adapted for alternatives An improved tax regime has made the Netherlands more tax efficient both for hedge fund Close document Previous page management activities and fund vehicles. Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Sander Eijkenduijn +44 (0)20 7804 5969 and Clark Noordhuis +31 20 568 6717 Read this article Previous article Skip article
  8. 8. Alternatives Investment Funds Electronic Newsletter // November 2007 Dutch tax regime adapted for alternatives An improved tax regime has made the Netherlands more tax efficient both for hedge fund Close document Previous page management activities and fund vehicles. Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Sander Eijkenduijn +44 (0)20 7804 5969 and Clark Noordhuis +31 20 568 6717 With the alternative investment industry growing fast, the beleggingsinstelling’ (VBI). This is fully exempt from Dutch Dutch tax authorities are competing to create an efficient corporate income tax and withholding tax. It can be used for environment. Recent changes in both tax practice and a broad range of alternative investment styles, such as regulation have been designed for just this purpose. fund-of-funds, feeder funds, infrastructure funds, real estate There is now a beneficial fiscal environment both for funds, money market instruments, swaps, commodity index alternatives investment firms and the funds they manage. funds and carbon emission rights, etc. In particular, the Netherlands has become one of the few Finally, the Netherlands are increasingly popular with hedge places in Europe to offer certainty regarding the tax treatment funds as a jurisdiction for locating their investment platforms of offshore funds advised by investment managers based for worldwide investments. The extensive tax treaty network, within the country. Although the Netherlands does not have the participation exemption for equity investments, the a formal tax exemption embedded in law, the local tax absence of capital tax and cooperative tax authorities, are key authorities do give favourable rulings. In several cases, advantages for offshore funds selecting the Netherlands. they have confirmed that funds will not be treated as being onshore. For alternatives managers that wish to market alternative investments onshore within Europe, there is a new more, modern fund, vehicle called the ‘Vrijgestelde
  9. 9. Alternatives Investment Funds Electronic Newsletter // November 2007 Securitisation in the UK The new permanent tax regime Close document Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Robert Mellor +44 (0)20 7804 1385 and Lachlan Roos + 1 646 471 0025 Read this article Previous article Skip article
  10. 10. Alternatives Investment Funds Electronic Newsletter // November 2007 Securitisation in the UK The new permanent tax regime Close document Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Robert Mellor +44 (0)20 7804 1385 and Lachlan Roos + 1 646 471 0025 Securitisation began in the UK in the 1980s and has In the UK, for periods beginning on or after 1 January 2007, since been mostly used by banks as part of managing where an entity meets the definition of a ‘securitisation risk in their balance sheets and to help meet regulatory company’ it will be taxed under the new regime, whereby only capital requirements. retained profit, which can be nil if so decided by the directors of the entity, is taxed. There are various conditions to be met However, in recent times it has become a key structuring tool for the regime to apply. Also where certain of these are for many within the alternatives market, particularly within the breached the favourable tax treatment will be lost and cannot hedge fund space. The process enables funds to securitise be reinstated. or package debts of differing credit ratings, and to tailor the end risk/reward product to different clients. The favourable regime has taken a global approach and covers not only UK-resident entities but also non-resident The EU introduction of the requirement for listed companies entities with a UK permanent establishment. The regime also to use International Accounting Standards (IAS) created includes extended definitions to incorporate Sharia-compliant a difference of treatment between IAS and UK GAAP, resulting bonds (otherwise referred to as ‘sukuk’-issuing companies) in difficult tax positions for UK securitisation vehicles. into the securitisation regulations, such that they may also Representations were made by the industry and it was obtain any favourable tax treatment. announced by the UK Government that a permanent tax regime for securitisation companies would be created.
  11. 11. Alternatives Investment Funds Electronic Newsletter // November 2007 The favourable regime has taken a global approach and covers not only UK-resident entities but also non-resident entities with a UK permanent establishment. Close document Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Robert Mellor +44 (0)20 7804 1385 and Lachlan Roos + 1 646 471 0025 The UK securitisation regime is a rapidly changing sector, and the tax rules are new and may face further legislative change as we move forward. However, the UK now has a model to compete with the securitisation platforms found in continental Europe.
  12. 12. Alternatives Investment Funds Electronic Newsletter // November 2007 Commodities trading and VAT The VAT rules applicable to trading in energy and other commodities are complex and differ in many aspects to the general VAT rules applicable Close document to the financial services sector. Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Andrew Millin + 44 (0)20 7212 7995 and Shima Heydari +44 (0)20 7213 3631 Read this article Previous article Skip article
  13. 13. Alternatives Investment Funds Electronic Newsletter // November 2007 Commodities trading and VAT The VAT rules applicable to trading in energy and other commodities are complex and differ in many aspects to the general VAT rules applicable Close document to the financial services sector. Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Andrew Millin + 44 (0)20 7212 7995 and Shima Heydari +44 (0)20 7213 3631 Given the volume and amounts involved there are potentially Clients should take advantage of the Energy Network significant risks both in terms of VAT liability and VAT established by PricewaterhouseCoopers which ensures compliance. Hedge funds need to ensure that their systems cross-border knowledge of VAT liabilities and requirements are updated to comply with these complex rules and that all when trading in physicals and derivatives in other VAT opportunities are recognised. Member States. Many of the contracts traded in the energy market appear to be, on the face of them, ‘financial’. However, in many cases, the contract reference point will be an underlying deliverable commodity with differing VAT treatment. The VAT liabilities depend on a number of factors, including the type of energy, the type of contract and where the supply is treated as taking place, and it is vital, therefore, that businesses apply the correct VAT treatment.
  14. 14. Alternatives Investment Funds Electronic Newsletter // November 2007 Proposed changes in UK tax rules create opportunities for offshore hedge funds and fund of funds to distribute to UK investors Close document Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Martin Smith +44 (0)20 7212 5524, Robert Mellor +44 (0)20 7804 1358 and Elizabeth Stone + 44 (0)20 7804 9678 Read this article Previous article Skip article
  15. 15. Alternatives Investment Funds Electronic Newsletter // November 2007 Proposed changes in UK tax rules create opportunities for offshore hedge funds and fund of funds to distribute to UK investors Close document Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Martin Smith +44 (0)20 7212 5524, Robert Mellor +44 (0)20 7804 1358 and Elizabeth Stone + 44 (0)20 7804 9678 The Chancellor’s Pre-Budget Report announced the launch of on disposal gains for its UK investors, ultimately saving them a consultative document outlining a framework for the up to 22% in tax compared to the current tax regime. overhaul of the current UK ‘offshore funds regime’. Under the current proposals, analysis will be required on a Whether a UK investor is taxed on income or capital in case-by-case basis, to determine what proportion of returns, relation to any gains made on disposal of a holding in an during the life of any holding by a UK investor, can be offshore fund vehicle is determined by whether the vehicle deemed to be capital. The remaining returns would be subject can meet certain conditions imposed under the offshore funds to tax as income in the hands of the UK investor on an annual regime or not. Given the tax differential between income, basis. As recent and continuing developments regarding the which will continue to be taxed at 40%, and capital going treatment of derivatives and shorting techniques suggest that forward the application of the offshore funds rules will be of certain hedge fund returns could properly be regarded as much greater significance. capital and not income, hedge funds should now actively be The current offshore funds regime focuses on the need for the assessing whether they could obtain ‘reporting fund status’ fund to physically distribute its income returns for any given under the proposed new regime. period in the form of cash. The new regime focuses on tax Consultation on the new reporting fund regime is due reporting, and contains no requirement to distribute cash. to close in early January 2008, after which draft regulations For alternative funds this means that the fund may retain and will be published. reinvest its assets, while also looking to attain capital treatment
  16. 16. Alternatives Investment Funds Electronic Newsletter // November 2007 Working late? HMRC has always considered that travelling between a permanent workplace and home is an ordinary commuting journey and therefore a private journey Close document for tax and NIC purposes. Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Paul Hardy +44 (0)20 7212 4908, Jonathan Williams +44 (0)20 7804 8294 and Joanna Klaentschi +44 (0)20 7804 3869 Read this article Previous article Skip article
  17. 17. Alternatives Investment Funds Electronic Newsletter // November 2007 Working late? HMRC has always considered that travelling between a permanent workplace and home is an ordinary commuting journey and therefore a private journey Close document for tax and NIC purposes. Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Paul Hardy +44 (0)20 7212 4908, Jonathan Williams +44 (0)20 7804 8294 and Joanna Klaentschi +44 (0)20 7804 3869 So what happens if an employer bears the cost of this travel? In summary, HMRC acknowledged it has much work to do in Strictly the cost is a benefit in kind and tax and NI will be due. order to be able to settle open cases for earlier years and to However, historically HMRC has exempted the cost of travel reach agreement with employers on the basis for interpreting home borne by an employer, where an employee has worked the legislation for the future. late at night from a tax and NIC charge. So, if you meet the costs of late`-night taxis for employees, But HMRC is in the process of reviewing this treatment of we recommend you review your policy and internal controls to late-night travel by taxi and its revised guidance in this area ensure the conditions for exemption, as they stand, are met. has been distributed for consultation. As part of this process We would be pleased to assist you to consider how best to HMRC is considering how to resolve outstanding cases proceed in this area. where it contends the exemption does not apply and tax and NIC are due. Meetings have been held between HMRC officials, PricewaterhouseCoopers and other advisory firms and representative bodies in connection with this.
  18. 18. Alternatives Investment Funds Electronic Newsletter // November 2007 Taxation of non-domiciled partners Pre-Budget Report 2007 Close document Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Mark Waddilove +44 (0)20 7213 5786 Read this article Previous article Skip article
  19. 19. Alternatives Investment Funds Electronic Newsletter // November 2007 Taxation of non-domiciled partners Pre-Budget Report 2007 Close document Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Mark Waddilove +44 (0)20 7213 5786 The Government announced proposals to introduce legislation charge may be higher for those who have been in the 2008 Finance Bill that will include a new tax charge for resident in the UK for longer than 10 years, but this is those who wish to continue to use the remittance basis of still under consultation. taxation. From 6 April 2008, a non-UK-domiciled individual Finally, and potentially most significantly, the Government will who has been resident in the UK for seven out of the past 10 introduce legislation to deal with what the Chancellor referred years will only be able to use the remittance basis of taxation to as ‘anomalies in the detailed remittance rules’. These if they pay an additional tax charge of £30,000 per annum. changes will affect a number of planning techniques that are This charge will be in addition to any tax payable on the commonplace with non-UK-domiciled individuals – the HMRC income or gains remitted to the UK. press release1 refers specifically to ‘ceased source’ planning, In addition to this new charge, those non-UK-domiciled offshore trusts and company structures and extending the individuals who have unremitted foreign income of more than meaning of the term ‘remittance’. £1,000 will not be able to claim certain allowances, including the personal allowance currently set at £5,225. Those who do not wish to pay the additional £30,000 annual charge, must report and pay tax on their worldwide income and gains. This will bring them in line with UK-domiciled individuals. The Government also announced that the annual 1 HMRC media release – 09.10.07
  20. 20. Alternatives Investment Funds Electronic Newsletter // November 2007 Income tax shelters – has anti-avoidance effectively closed the market? Close document Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Lynne Rowland +44 (0)20 7213 5632 Read this article Previous article Skip article
  21. 21. Alternatives Investment Funds Electronic Newsletter // November 2007 Income tax shelters – has anti-avoidance effectively closed the market? Close document Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Lynne Rowland +44 (0)20 7213 5632 For the last decade we have seen billions of pounds of Another popular area is ideas that provide tax breaks and are investment into film partnerships, with the result that the good for the environment. Unfortunately the early carbon HMRC-accepted sale and leaseback structure is in its credit schemes did not provide the tax breaks anticipated, death throes as new legislation restricts tax relief to those and there are no specific tax breaks for investments companies which are actively involved in the film business. into wind farms. Product providers are still trying to structure Too much cash was flowing out of the Treasury in the form of bio-fuel plants, but the lead time from commencement tax refunds and increasingly sophisticated schemes sought to of construction through to the first commercial use can provide investors with tax mitigation rather than tax deferral. be as long as five years, which plays havoc with cashflow Needless to say, the demand for film structures continues in projections – no tax relief can be enjoyed until the plant is in the form of sole trader investments that seek to circumvent commercial use. the partnership restrictions on loss relief and use GAAP to The other much-loved investment is property. Investors are generate losses rather than film relief. The schemes available comforted by investing into something tangible that they were initially on a bespoke basis with high entry levels to understand, and some of the ideas that were being promoted restrict the numbers, but we are increasingly seeing entry earlier this year were proving so popular that HMRC levels falling to encourage investment. This is a double-edged introduced anti-avoidance before the deals had financially sword, as HMRC may argue that individuals investing at closed. There were a lot of angry investors and disappointed modest levels are not taking the same risks as someone developers at the time, but the Treasury was anticipating a investing, say, several million pounds, and consequently may huge level of refunds being requested and had to do refuse loss relief. something drastic, if unpopular.
  22. 22. Alternatives Investment Funds Electronic Newsletter // November 2007 HMRC treats a lot of retail ideas with a healthy scepticism and it is par for the course for tax refunds to be withheld until HMRC is comfortable, or has run out of reasons to continue to withhold. Close document Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Lynne Rowland +44 (0)20 7213 5632 There will probably be a small amount of enterprise zone The message is that there are ideas around, but they are capacity available this year, and also structures offering not as easy to access as they were perhaps five years ago. syndicated buy-to-let portfolios. The big question is whether HMRC treats a lot of retail ideas with a healthy scepticism clients will continue to plough money into property when the and it is par for the course for tax refunds to be withheld signs are that the market is heading for saturation, but again, until HMRC is comfortable, or has run out of reasons the comfort blanket of a bricks and mortar investment will to continue to withhold. This does mean that investors probably prevail. have to understand that the outcome can be uncertain, and not easy to predict from a cashflow perspective, but even The introduction of the tax avoidance disclosure regime has with a negotiated settlement, it can still be worth entering into played a big part in offering HMRC advance warning of new the planning. tax strategies. We are seeing more and more ideas being brought to market before the final thinking has been done to avoid disclosure for as long as possible. This makes it extremely difficult for ideas to be shared and publicised and for a detailed analysis of the structure to be provided at an early stage.
  23. 23. Alternatives Investment Funds Electronic Newsletter // November 2007 Proposed changes to the investment manager exemption On 9 October the Chancellor published his Pre-Budget Report (PBR) which included proposed changes to the legislation Close document Previous page governing the investment manager exemption (IME). Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Robert Mellor +44 (0)20 7804 1385, Debbie Payne + 44 (0)20 7213 5443 and Lachlan Roos + 1 646 471 0025 Read this article Previous article Skip article
  24. 24. Alternatives Investment Funds Electronic Newsletter // November 2007 Proposed changes to the investment manager exemption On 9 October the Chancellor published his Pre-Budget Report (PBR) which included proposed changes to the legislation Close document Previous page governing the investment manager exemption (IME). Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Robert Mellor +44 (0)20 7804 1385, Debbie Payne + 44 (0)20 7213 5443 and Lachlan Roos + 1 646 471 0025 This covers two issues identified as part of the earlier were covered unless specifically excluded. On balance it consultation process which could not be fully addressed in was felt that aligning the definition with that of the FSA the updated Statement of Practice SP1/01. Both these issues would reduce the compliance burden and provided greater were discussed at a meeting between HMRC and industry certainty for companies whilst avoiding the complexities bodies in August as part of a consultation exercise by HMRC. around drafting legislation to exclude specific transactions. At this stage it had doubts as to whether it would be able to At the same time it was acknowledged that some activities get these changes enacted in Finance Act 2008, so the fact which currently fall within the scope of the investment that it has announced them in the PBR should be taken as manager exemption would not be covered by this further evidence of its commitment to supporting the UK approach because they are not regulated activities. investment management industry. One example of this would be carbon credits. Equally, The changes being proposed are: there are still assets such as land and commodities which HMRC would want to ensure remain excluded for policy 1 The definition of investment transaction be amended reasons. It can therefore be anticipated that the current list to align it more closely with the FSA definition of of specific exclusions will remain in place once the regulated activities. legislation is enacted but, equally, that additional This was one of two options discussed with industry transactions which are permitted for tax purposes will be bodies, the other alternative being that all transactions added to the list.
  25. 25. Alternatives Investment Funds Electronic Newsletter // November 2007 The key group of managers who would have difficulties meeting either test would be managers who managed a single fund. Close document Previous page Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Robert Mellor +44 (0)20 7804 1385, Debbie Payne + 44 (0)20 7213 5443 and Lachlan Roos + 1 646 471 0025 2 The removal of the ‘cliff edge’ test, whereby if a single on business in the UK through an agent of independent non-investment transaction is entered into by a UK status. The key group of managers who would have investment manager on behalf of the non-resident fund the difficulties meeting either test would be managers who fund could be considered to have failed the IME. managed a single fund. Given that no proposals were announced to address this, it still remains an area of HMRC tried to address this issue in the updated Statement uncertainty, although doubtless there will be further of Practice to provide an interim solution for non-resident discussions between HMRC and industry bodies in relation funds which were faced with this position. However, it was to this and the definition of investment transactions over always understood that changes to the primary legislation the coming months. were required to provide certainty for fund managers. The discussions with HMRC went wider than this point and included consideration of the impact of failing the independent capacity condition. The debate in this area focused around the risk that a manager did not meet the requirements of the IME and in addition could not avail itself of the more general protection afforded by Section 148(3) Finance Act 2003 which prevents a non-resident fund from creating a taxable presence in the UK if it carries
  26. 26. Alternatives Investment Funds Electronic Newsletter // November 2007 Changes to rules for claiming no UK tax residence The deadline of 31 January 2008 for submitting this year’s self-assessment tax return (2006/07) Close document Previous page is fast approaching. Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Mark Waddilove +44 (0)20 7213 5786 Read this article Previous article Skip article
  27. 27. Alternatives Investment Funds Electronic Newsletter // November 2007 Changes to rules for claiming no UK tax tesidence The deadline of 31 January 2008 for submitting this year’s self-assessment tax return (2006/07) Close document Previous page is fast approaching. Next page Contents Print Click on each PricewaterhouseCoopers author’s name to contact them directly via email By: Mark Waddilove +44 (0)20 7213 5786 If you have overseas interests, you will notice that the This could easily lead to confusion and incorrect disclosure if return contains a number of changes to the non-residence applied without consultation of the law and full consideration pages. HMRC now requires more detail, probably because of the facts. of such decisions in the Robert Gaines-Cooper case (see The Chancellor’s Pre-Budget Report (PBR) 2007 made further article in the previous edition of Rain or Shine), which changes in his review of residence for UK tax purposes. challenged the accepted view of HMRC’s approach on certain In line with the approach we have seen in recent case law, residency issues. HMRC will introduce rules to ensure that, after 6 April 2008, If your tax affairs are such that you are required to complete days of arrival and departure will be counted as days of the non-residence supplementary pages, HMRC now tries to presence in the UK for residence test purposes. ascertain the exact circumstances of your travelling If you are a frequent traveller to the UK but claiming arrangements, when claiming to be non-resident for tax non-resident status in the UK, the above-proposed changes purposes. HMRC has specifically added new questions to in the PBR 2007 may affect your personal tax planning. gather sufficient information for it to determine whether Therefore, timely consideration is required if you would like to taxpayers are applying their guidance in form IR20 correctly. maintain non-resident status. Some of the questions in the supplementary pages to the return, particularly within the section ‘Time spent in the UK’ and the accompanying notes, are not completely clear.
  28. 28. Alternatives Investment Funds Electronic Newsletter // November 2007 Close document Previous page Next page Contents Print The member firms of the PricewaterhouseCoopers network provide industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 146,000 people in 150 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice. This report is produced by experts in their particular field at PricewaterhouseCoopers, to review important issues affecting the financial services industry. It has been prepared for general guidance on matters of interest only, and is not intended to provide specific advice on any matter, nor is it intended to be comprehensive. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers firms do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. If specific advice is required, or if you wish to receive further information on any matters referred to in this paper, please speak with your usual contact at PricewaterhouseCoopers or those listed in this publication. © 2007 PricewaterhouseCoopers. All rights reserved. PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

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