The disguised investment management fees (DIMF) rules were inserted as ITA 2007 ss 809EZA–809EZH by FA 2015 and apply for years of assessment 2015/16 onwards. The declared purpose of the rules was to tax as income remuneration received by an individual for providing investment management services. Initially and to the relief of many carried interest (‘carry’) was exempted from the rules but FA 2016 brought one type of carry ‘income based carried interest’ (IBCI) within the rules. As will appear and as one might expect the rules are complex broadly drawn and require a close factual examination of the structure in question.
Background
By way of example diagram A details a classic start-up structure adopted by many UK hedge fund managers and established in the last 10 to 15 years with a simplified fund structure. Whilst we look at hedge fund structures...
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The disguised investment management fees (DIMF) rules were inserted as ITA 2007 ss 809EZA–809EZH by FA 2015 and apply for years of assessment 2015/16 onwards. The declared purpose of the rules was to tax as income remuneration received by an individual for providing investment management services. Initially and to the relief of many carried interest (‘carry’) was exempted from the rules but FA 2016 brought one type of carry ‘income based carried interest’ (IBCI) within the rules. As will appear and as one might expect the rules are complex broadly drawn and require a close factual examination of the structure in question.
Background
By way of example diagram A details a classic start-up structure adopted by many UK hedge fund managers and established in the last 10 to 15 years with a simplified fund structure. Whilst we look at hedge fund structures...
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