HMRC have issued regulations setting out the tax treatment of the long-term asset fund (LTAF), a new type of authorised fund targeting investment in long-term illiquid assets. An LTAF can be an open-ended investment company (OEIC), an authorised unit trust (AUT), or an authorised contractual scheme.
The Authorised Investment Funds (Tax) (Amendment) Regulations, SI 2021/1270 insert a new Part 2AA into the principal Authorised Investment Funds (Tax) Regulations, SI 2006/964 to cover the tax treatment of LTAFs. In order to fall within the principal Regulations, an LTAF that is either an OEIC or AUT will be required to meet the genuine diversity of ownership (GDO) condition in reg 9A (as amended by these new Regs). That condition will be met where the fund published its prospectus before 9 December 2021 or where at least 70% of the units in the fund are held by ‘relevant investors’. The categories of relevant investor are set out in new paras (8B)–(8G) of the amended reg 9A.
The explanatory memorandum to the new regulations notes that ‘an LTAF will be able to submit a clearance to HMRC where it is unclear whether the GDO condition is satisfied. This information, together with continuing engagement with industry, will allow HMRC to closely monitor the operation of the rules and to consider whether further changes may be required to ensure that they are working as intended.’
HMRC have issued regulations setting out the tax treatment of the long-term asset fund (LTAF), a new type of authorised fund targeting investment in long-term illiquid assets. An LTAF can be an open-ended investment company (OEIC), an authorised unit trust (AUT), or an authorised contractual scheme.
The Authorised Investment Funds (Tax) (Amendment) Regulations, SI 2021/1270 insert a new Part 2AA into the principal Authorised Investment Funds (Tax) Regulations, SI 2006/964 to cover the tax treatment of LTAFs. In order to fall within the principal Regulations, an LTAF that is either an OEIC or AUT will be required to meet the genuine diversity of ownership (GDO) condition in reg 9A (as amended by these new Regs). That condition will be met where the fund published its prospectus before 9 December 2021 or where at least 70% of the units in the fund are held by ‘relevant investors’. The categories of relevant investor are set out in new paras (8B)–(8G) of the amended reg 9A.
The explanatory memorandum to the new regulations notes that ‘an LTAF will be able to submit a clearance to HMRC where it is unclear whether the GDO condition is satisfied. This information, together with continuing engagement with industry, will allow HMRC to closely monitor the operation of the rules and to consider whether further changes may be required to ensure that they are working as intended.’
