Key takeaways

• "As Gregor Samsa awoke one morning from uneasy dreams he found himself transformed in his bed into a gigantic insect.” So begins Kafka’s angst riddled story, "The Metamorphosis." We’re not suggesting that investment fund managers have physically changed into beetles but HMRC has certainly altered its approach to the industry as if UK fund managers had in fact undergone a mass transformation.
• From relative tax anonymity, HMRC’s spotlight has been firmly focussed on the industry for the past year or so. We’ve had the Disguised Investment Management Fee rules, abolition of base cost shift on carried interest and the deemed UK sourcing of carried interest, all within a year. At times the blend of absurdity bordering on surrealism which has characterised some of the proposals has lent a distinctly Kafkaesque feel to the proceedings.
• Today the revised draft legislation has been published regarding the interest based carried interest rules, and this Client Update highlights the key elements of the legislation.