For immediate release: Friday 24 September 2004
IMA RESPONDS TO INLAND REVENUE DISCUSSION PAPER ON AUTHORISED INVESTMENT FUNDS
The Investment Management Association has today submitted its final response to the Inland Revenue's technical discussion paper on the new COLL regime.
This long-awaited paper, following the implementation of the new COLL sourcebook in April, has raised a number of technical issues which need to be addressed. The paper also makes two suggestions of considerable concern to the industry.
Firstly, proposals that the newly introduced Qualifying Investor Schemes (QIS) might be taxed as ordinary companies and not as authorised investment funds. This would result in QIS funds being subjected to corporation tax at 30% which would reduce the attractiveness of running such a scheme. The likelihood is that, if implemented, the move would make QIS funds redundant before they have even got up and running. IMA urges that QIS funds should be taxed as what they are - authorised investment funds.
IMA's second concern is that the tax treatment of authorised investment funds, which use or invest in derivatives, could once again undergo a review. It was generally understood that the tax position previously agreed with the Inland Revenue would not change. The possibility of a review will lead to uncertainty and could be damaging for the industry.
In its response, the Association has also taken the opportunity to suggest ways of modernising and simplifying the taxation of funds. This follows on from IMA's proposals highlighted in "Investing in Savers", launched in Westminster on 15 September.
The IMA has also requested a number of urgent changes which need to be made immediately, before the next Finance Bill. These proposals include:
- Land and property investments to be brought within the bond fund regime
- Removing the remaining anomalies which still occur with stamp duty
- Extending the current provisions which permit Corporates to reclaim any tax lost inside a vehicle. In particular, IMA would like to see this provision include charities, pensions funds and PEP and ISA managers
- Immediate amendment of the ISA regulations to permit non-UCTIS retail funds to be eligible investments inside the ISA wrapper
Julie Patterson, Director of Regulation, Operation and Taxation commented:
"IMA welcomes this opportunity to feedback to the Inland Revenue on issues of particular concern to the fund management industry. The proposals we have put forward are largely tax neutral changes which will have a positive impact on our industry. The Association has also taken this as an opportunity to urge the Government to have a fundamental rethink of the taxation of savings products in the UK."
For further information, please contact:
Helen Stephenson, Communications Officer, IMA, 020 7831 0898
Julie Patterson, Director - Regulation, Operation and Taxation, IMA, 020 7831 0898
Out of hours contact:
Mona Patel, Head of Communications, 07834 089332
Notes to Editors:
Please find attached: