The Alternative Investment Management Association (AIMA), a global hedge fund and alternative investment industry association, welcomed the HMRC response in their consultation exercise on changes to the Investment Manager Exemption (IME).
The IME enables offshore funds trading in the UK in certain investments and is largely exempt from UK taxation. A key concern of managers has been certainty that they meet IME conditions, and the HMRC is now taking steps to address that concern.
Key points are:
•A hierarchy of tests will provide certainty on the independent capacity test
•Explanation will be given as to how customary remuneration is quantified and how it interacts with transfer pricing
•Clarification as to the treatment of certain transactions will be provided
•Legislative treatment of non-qualifying transactions will be reviewed, and confirmation will be given that minor or inadvertent participation in non-qualifying transactions will not mean that the IME is failed
•HMRC will give a manager due notice of any concerns about IME compliance and the opportunity to take corrective action before any assessment is raised on the fund.
“AIMA considers these proposals as generally most encouraging,” said Mary Richardson, AIMA’s director. “HMRC have clearly taken the industry’s views into account and are now taking steps to address important concerns raised. AIMA looks forward to the revised draft Statement of Practice, due by 30th June 2007, and will continue its dialogue with HMRC as the revised SP takes shape.”