McDermott Comment | Treasury Plans UK Tax Shake-Up for Asset Holding Companies


Commenting on a consultation paper published by the UK Treasury which pledges to radically reform the tax treatment of companies used by alternative funds (private equity, private credit or infrastructure funds) and some pension funds to hold assets. Click here to view the consultation paper.

James Ross, partner at law firm McDermott Will & Emery, said:
“The consultation document identifies a number of the difficulties commonly associated with the use of intermediate fund holding companies in the UK. Addressing these issues will enable funds to establish UK-based structures with greater confidence as to how it, and its investors, will be taxed. But any new regime needs to provide certainty and simplicity. The consultation document indicates that the regime will (unsurprisingly) include a number of anti-avoidance provisions – unless they are carefully drawn, they risk creating uncertainty for investors seeking to use the new regime, and any reform will have achieved little other than to complicate the UK tax system yet further.”

Tom Whelan, partner at law firm McDermott Will & Emery, added:
“If these proposed reforms were to be enacted, this would be a welcome shot in the arm for the UK’s private equity industry and should boost the establishment of such fund holding vehicles in the UK, although post Brexit it will be important to understand the full regulatory overlay to the extent such UK funds are investing in or looking to attract investors from the EU.”