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Today, the Government published the draft clauses for the Finance Bill 2014 for consultation. It stretches to approximately 700 pages and includes the announcements made in the 2013 Autumn Statement.
As well as the usual revisions to personal, corporate, indirect taxes and tax administration, there are a number of key provisions of particular relevance to the Alternative Investment Fund Management industry. These include the following:


  • Salaried members of a Limited Liability Partnership (LLP) – “Salaried Member” legislation is being introduced. Members who are unable to exercise significant influence over the LLP, do not contribute sufficient capital or whose total compensation is insufficiently aligned to the profits of the entity will be subject to income tax and national insurance (NI) as employees, with the additional burden of 13.8% employer’s NI on the LLP. This takes effect on 6 April 2014. Anti avoidance rules will operate to prevent the sidestepping of these rules by the use of personal service companies.
  • Mixed Membership Partnerships (individual and corporate members) – A newsletter covering the effects of this was issued on 6 December 2013 - VIEW HERE.
  • Tax motivated disposals of assets through a partnership – With effect from 6 April 2014, a charge to income tax will arise on a person making a disposal of an asset or income stream through a partnership if the main purpose, or one of the main purposes of the disposal, or any of the steps effecting the disposal, is to secure a tax advantage.
  • Tax implications of remuneration deferrals under the Alternative Investment Fund Managers Directive (AIFMD) – Draft legislation will introduce a mechanism for members of AIFM partnerships to elect to allocate profits to the partnership that are either subject to the remuneration deferral rules or the Pay-Out Process rules of the AIFMD. The profits so allocated will be subject to the additional rate of income tax, currently 45%, to be paid by the partnership.

As you would expect, the draft legislation is lengthy and complex and we are giving detailed consideration to each of the above. Further, more detailed newsletters will follow.

UK Management of Offshore Funds
Currently, offshore funds which fall within the UCITS Directive are not treated as resident for UK tax purposes if they are resident in another EU member state for the purposes of taxes on income. Draft provisions extend this treatment to Alternative Investment Funds established in another member state. These will take effect from 5 December 2013.

Compensating Adjustments
As announced on 25 October 2013, and effective from that date, draft legislation is included to prevent the avoidance of tax by the exploitation of compensating adjustments made for Transfer Pricing purposes.

Employment Intermediaries
Draft clauses prevent the use of offshore and onshore intermediaries to avoid employment taxes.

The Artificial Use of Dual Contracts by Non-Domiciles
Draft legislation will be published in January 2014 to counter the artificial use of dual contracts by non-domiciled individuals to avoid tax.

If you have any questions please speak to your usual contact on +44 (0)118 939 3200 or any of the following: 

Neil Oliver 

10 December 2013 

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About Throgmorton: Throgmorton is one of the leading companies specialising in the provision of financial and administrative outsourcing to the UK SME financial services sector.

The information in this notice is intended for general guidance only. Throgmorton does not accept any responsibility for losses incurred to any person acting or refraining to act as a result of the information in this notice. Advice should be taken in the context of specific circumstances.

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