Revenue chases forbidden fruits

Personal equity plan managers are being told by the Inland Revenue that they have until 5 April to pull their money out of emerging markets that are not on its list of recognised stock exchanges - or lose their tax privileges.

Funds will be required to sell shares to ensure their assets are less than 50 per cent invested in these non-recognised exchanges. Failure to do so will threaten their eligibility for capital gains tax relief. Individuals who opted for self- invested emerging market PEPs will also lose their tax breaks.

The Revenue has told Pepma, the 101-strong PEP managers' association, that it intends to collect CGT on gains made in the 1993/4 tax year on PEPs that breached the rules. In its letter to the association, the Revenue says it will be writing to all PEP plan managers and "no-one involved will escape unscathed".

In a separate move earlier this month, the Revenue reached a private deal with the Association of Unit Trusts and Investment Funds and the Association of Investment Trusts Companies (Autif) over their members' liability to CGT. Three AITC members are believed to have agreed to pay CGT worth more than £530,000 for 1993/4. A further seven Autif members paid £50,000 between them.

Philip Warland, director-general of Autif, stressed that tax payments would be made by PEP managers, not individual investors. He said: "The PEP allowance of individual investors was unaffected even though people were invested in funds that were technically not PEPpable."

The Revenue has now asked Pepma to help it to track down PEP managers who have breached the rules. Those most likely to be affected are private- client stockbrokers with self-select or advisory PEPs. Some could face CGT bills for thousands of pounds.

The tax liability arose because of confusion caused by a Revenue rule change in April 1993. This required PEP managers to divest from "non-qualifying" investments, including gilts and non-recognised stock exchanges.

Some managers assumed the approved list of securities markets was issued by their regulatory body, the Securities and Investments Board. It later emerged that the Revenue had its own list of recognised stock exchanges, which excluded four markets on the SIB list.

The four markets - Mexico, Malaysia, South Korea and Thailand - have attracted a significant proportion of the money that flowed into emerging market funds during the peak of the boom in those areas in 1992-93. Last October the Revenue finally recognised these four markets, but is sticking to its plans to claw back CGT arising from investments in them during 1993/4.

PROMOTED VIDEO
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Citifocus Ltd: Newly Qualified Accountants - Risk Mgmt

£Attractive Package: Citifocus Ltd: Prestigious financial institution seeks to...

Citifocus Ltd: Operational Risk Analyst

£Negotiable: Citifocus Ltd: Experienced operational risk professional with ban...

h2 Recruit Ltd: Business Development - Telecommunications - £50,000 OTE

£25000 per annum + £50,000 OTE: h2 Recruit Ltd: London, Reading , Southend, Al...

Recruitment Genius: Call Centre Agent - £22,000 OTE

£18000 - £22000 per annum: Recruitment Genius: As a Call Centre Agent you will...

Day In a Page

Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?
Nightclubbing with Richard Young: The story behind his latest book of celebrity photographs

24-Hour party person

Photographer Richard Young has been snapping celebrities at play for 40 years. As his latest book is released, he reveals that it wasn’t all fun and games
Michelle Obama's school dinners: America’s children have a message for the First Lady

A taste for rebellion

US children have started an online protest against Michelle Obama’s drive for healthy school meals by posting photos of their lunches
Colouring books for adults: How the French are going crazy for Crayolas

Colouring books for adults

How the French are going crazy for Crayolas
Jack Thorne's play 'Hope': What would you do as a local politician faced with an impossible choice of cuts?

What would you do as a local politician faced with an impossible choice of cuts?

Playwright Jack Thorne's latest work 'Hope' poses the question to audiences
Ed Harcourt on Romeo Beckham and life as a court composer at Burberry

Call me Ed Mozart

Paloma Faith, Lana del Ray... Romeo Beckham. Ed Harcourt has proved that he can write for them all. But it took a personal crisis to turn him from indie star to writer-for-hire
10 best stocking fillers for foodies

Festive treats: 10 best stocking fillers for foodies

From boozy milk to wasabi, give the food-lover in your life some extra-special, unusual treats to wake up to on Christmas morning
Phil Hughes head injury: He had one weakness – it has come back to haunt him

Phil Hughes had one weakness – it has come back to haunt him

Prolific opener had world at his feet until Harmison and Flintoff bounced him
'I have an age of attraction that starts as low as four': How do you deal with a paedophile who has never committed a crime?

'I am a paedophile'

Is our approach to sex offenders helping to create more victims?
How bad do you have to be to lose a Home Office contract?

How bad do you have to be to lose a Home Office contract?

Serco given Yarl’s Wood immigration contract despite ‘vast failings’
Green Party on the march in Bristol: From a lost deposit to victory

From a lost deposit to victory

Green Party on the march in Bristol
Putting the grot right into Santa's grotto

Winter blunderlands

Putting the grot into grotto
'It just came to us, why not do it naked?' London's first nude free runner captured in breathtaking images across capital

'It just came to us, why not do it naked?'

London's first nude free runner captured in breathtaking images across capital