The decision by the Inland Revenue to issue new guidance on how stamp duty will have to be paid is said to make it more difficult to meet the Treasury's so-called CATmark standards. These are benchmarks aimed at ensuring no initial charges and an annual fee of no more than 1 per cent.
The aim of the new rules is to simplify stamp duty, levied at a rate of 0.5 per cent on share dealings. Under the existing system, surrenderers of units to a unit trust manager faced a 0.5 per cent charge. But if the manager sold the units to a new investor, the charge was not levied.
The Treasury's aim is to put stamp duty on units on a par with that on shares and securities by allowing the 0.5 per cent charge to be the final liability. Many managers say this will force them to pay more stamp duty, making it difficult to comply with the CAT standards.
The Treasury, however, argues that the new row over CATmarks ignores the fact that this 0.5 per cent charge can be offset against the natural investment lifetime of a fund, which is typically between eight and 10 years. This would have a negligible effect on total charges and CATmark.
The argument is likely to confirm the decision of many managers not to comply with Government wishes over CATmarks.
One senior executive of a company that will continue to offer a CATmarked fund says: "If one were being cynical, one could say that some might even welcome the Inland Revenue's announcement.
"It means that, if the industry is attacked for not offering cheap products, it will simply reply that it is prevented from doing so by the Revenue's actions."
Several dozen funds that might have been offered under the CATmarked scheme will not now be launched under this guise.
For investors, already reeling under a boycott by fund managers of the Treasury's attempts to deliver fair charges to consumers, this will be another sting in the tail.