Offshore funds - response to IR consultation
Mondaq Business Briefing › United Kingdom Law Articles in English (2002)
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Offshore funds - response to IR consultation
For consultation document see:
http://www.inlandrevenue.gov.uk/consult_new/offshore_funds.pdf1. SUMMARY OF REPRESENTATIONS1.1 - The review of the offshore funds legislation is welcomed, because the legislation has not kept pace with a variety of developments which have occurred since 1984, including the impact of the (developing) case law of the European Court of Justice in relation to the Community effects of national tax measures, the proliferation, both geographically and in terms of number, of funds to which the legislation applies, and the comprehensive review of the taxation of Government and Corporate Debt in 1995/1996.1.2 - Total abolition of the offshore funds regime would solve all of the problems. However, it would re-create the possibility of the tax avoidance which originally stimulated the introduction of the regime.1.3 - A new regime is therefore indicated. However, any regime which involves investment in UK authorised unit trusts/OEICs being taxed on a more favourable basis than investment in corresponding EU investment products can by no means be guaranteed to withstand EU challenge and the best chances of successful resistance to such a challenge would appear to lie with an anti-avoidance provision that is as narrowly targeted as possible. Such narrow targeting would serve the added desirable purpose of easing the compliance burden. 1.4 - The regime currently applied to corporate investors by FA 1996 Schedule 10, suitably adapted and modified to deal with individual investors, has much to commend it as a model. 1.5 - The existing general principle of taxing individuals on investment returns on a realisation basis should be retained and embodied in any new regime. 1.6 - The remainder of this note is arranged as follows:- 2. Comments in Support - 2.1 Background - 2.2 Abolition as a Way Forward - 2.3 Criteria for a New Regime - 2.4 Conclusions3....See the full content of this document
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