Authorised Contractual Schemes: more clarity

Anna Burchner, Tax Partner, CMS

As announced at Budget 2016 and following consultation, the Government will introduce legislation in Finance Bill 2017 and secondary legislation to clarify the rules on capital allowances, chargeable gains and investments by co-ownership Authorised Contractual Schemes in offshore funds, as well as information requirements on the operators of these schemes.  Clarity through legislation will be welcome, particularly as even the draft HMRC manual on Authorised Contractual Schemes (ACSs)  is silent on these topics.

ACSs are also known as tax-transparent funds.  The objective of introducing ACSs in 2013 was to bring the UK in line with popular fund jurisdictions such as Luxembourg and Ireland by offering a fund structure that puts investors in the same (or better) tax position as if they had invested directly in the underlying fund assets.  ACSs can be established in two legal forms: (i) as authorised co-ownership schemes, and (ii) as authorised limited partnership funds.

ACSs may offer a solution at a time when new transparent fund structures for institutional investors may need to be found in light of impending wholesale changes in the international tax framework due to the Base Erosion and Profit Shifting (BEPS) Project.


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