Treasury takes aim at murky hedge funds in £3bn tax avoidance crackdown
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Thursday 05 December 2013
The billionaire partners of Mayfair’s shadowy hedge funds are to see their taxes rise by more than £3bn over the next six years under a clampdown on avoidance measures.
Hedge funds are generally structured as limited liability partnerships, with the fund managers treated as self-employed. The arrangement means some of the most profitable business in the country pay no employers’ national insurance, allowing them to make even more money.
Fund managers in LLPs are also allowed to defer paying their income tax to the end of the financial year, allowing them to earn interest before handing it over to the Treasury.
While details will not emerge until next week’s Draft Finance Bill, these salaried partner structures are likely to be banned.
Aidan Sutton, tax adviser at PWC said: “The devil is in the detail on this one. But the huge amount the Treasury is trying to raise clearly indicates they are going to make some swingeing changes. But they need to watch out for collateral damage: many of these arrangements are totally bona fide.”
The move will not only strike out many hedge funds’ arrangements. Although the Treasury press release specifically referred to “alternative investment funds”, it will also capture a range of other industries where the tax avoidance technique is used, from fruit picking to seemingly respectable law firms in which huge numbers of employees are made salaried partners.
- 1 BBC told new political editor must be 'impartial' with Nick Robinson reportedly stepping down
- 2 Number of young homeless people in Britain is 'more than three times the official figures'
- 3 Humans of New York image of crying gay teen receives best response yet from Ellen DeGeneres
- 4 The map showing the most dangerous tourist destinations in Europe, according to the Foreign Office
- 5 Swedish minister gives strongest case yet on why EU should stop turning away asylum seekers
BBC told new political editor must be 'impartial' with Nick Robinson reportedly stepping down
Isis propaganda video shows 25 Syrian soldiers executed by teenage militants in Palmyra
Number of young homeless people in Britain is 'more than three times the official figures'
Humans of New York image of crying gay teen receives best response yet from Ellen DeGeneres
The map showing the most dangerous tourist destinations in Europe, according to the Foreign Office
More Britons believe that multiculturalism makes the country worse - not better, says poll
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
Osborne to cap family benefits at £23,000 – announced ahead of his post-election Budget
iJobs Money & Business
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...