Alternative Investment Management Association
25 March 2008
London, 25 March 2008: The Alternative Investment Management Association (AIMA), the global hedge fund association, broadly welcomes the legislation proposed in the Budget released last week.
This legislation affects a number of areas with an impact on the UK hedge fund industry, including the following:
• Updates to the Investment Manager Exemption
• Non-Domiciled Taxation
• Updates to the offshore funds regime
• Capital Gains Tax (CGT) revisions are being brought in to include entrepreneurs relief
• VAT exemption for certain listed closed ended non-UK recognised schemes
• Funds of Alternative Investment Funds (FAIFs): the Treasury has referred to removing tax barriers for offshore funds
Investment Manager Exemption (IME)
AIMA welcomes the updates to the IME, which provide more certainty to the industry in the UK. These will allow proportionality if there is a partial failure by reason of non-investment transaction; and the way that investment transactions are defined will be changed to make updating easier.
AIMA welcomes the intention to proceed with changes to the offshore funds tax regime and looks forward to continuing to work with the Government on this.
Capital Gains Tax
Revisions are being brought in to include entrepreneur’s relief.
We welcome the Government’s decision to change some of the proposed measures in relation to the tax treatment of non-domiciliaries and the proposals are, in our view, better than originally proposed.
However, we do believe that the proposed measures will have a negative impact on the UK hedge fund management industry and should be not be implemented. AIMA regrets that HM Treasury has not, at the least and as AIMA suggested, postponed the planned measures to reconsider the potential impact carefully and comprehensively. The changes are also disappointing when HMRC has been working positively in other areas such as the operation of the investment manager exemption and onshore fund of funds to make the UK a more attractive place for hedge funds.
VAT exemption for listed closed ended non-UK recognised schemes
AIMA is concerned to clarify the impact of managers’ ability to recover VAT in respect of certain types of funds.
Funds of Alternative Investment Funds (FAIFs)
AIMA welcomes the Government’s intention to proceed with the development of a new “Tax FAIFs” regime and looks forward to continuing to work with the Government on the proposed changes.
Andrew Baker, Deputy CEO, AIMA, commented: “AIMA on behalf of its members broadly welcomes the Budget regulations as they affect the hedge fund industry. In a number of areas HM Treasury’s draft regulations are a demonstration of the need to maintain the competitiveness of the UK as a base for hedge fund investment and recognition by it of how the industry is developing. In particular, changes to the proposed measures for non-dom taxation have taken into account some - but not all - of our concerns regarding the potential effects of this legislation on the UK hedge fund industry.”
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For further information, please contact:
Eoin Brophy (Hume Brophy)
T: +44 (0)20 7499 8736
Evan DeBarra (Hume Brophy)
Senior Account Manager
T: +44 (0)20 7499 8736
1. About AIMA
As the only truly representative global hedge fund association, AIMA, the Alternative Investment Management Association, has over 1280 corporate members worldwide, based in 47 countries.
Members include leading hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting services and fund administrators. They all benefit from AIMA’s active influence in policy development, its leadership in industry initiatives, including education and sound practice manuals and its excellent reputation with regulators, worldwide.
AIMA is a dynamic organisation that reflects its membership’s interests and provides them with a vibrant global network.
AIMA is committed to developing industry skills and education standards and is a co-founder of the Chartered Alternative Investment Analyst designation (CAIA) – the industry’s first and only specialised educational standard for alternative investment specialists. For further information, please visit AIMA’s website HUwww.aima.orgU