There’s a good mix of things on at the moment. While market conditions have had an impact on the number of new listed funds being launched, there’s still a strong appetite for raising private fund capital. One interesting project is a new credit fund where we are looking at the UK’s qualifying asset holding company regime as an alternative to more traditional jurisdictions like Luxembourg. The regime has a lot to offer but feels more complicated than it needs to be (especially around the ‘ownership condition’). Aside from that, I’m advising on a number of property joint ventures, a group reorganisation and a steady flow of M&A and financing transactions.
What do you know now that you wish you’d known at the start of your career?
I would remind anyone at the start of their career to always step back and look at the bigger picture. The details matter in tax – and you have to get them right – but it’s easy to get bogged down in the minutiae. Stopping to talk something through with a colleague is usually the best way to get a fresh perspective and is always worthwhile.
If you could make one change to tax, what would it be?
A clear safe harbour in the QAHC rules for credit funds involved in loan origination would be helpful. Under the activity condition, a QAHC has to be carrying on an investment business, not a trade. Although HMRC has published some useful guidance that clarifies that loan origination is not in itself a problem, and it has indicated that holding investments for the ‘medium to long term’ will generally be ok (though HMRC doesn’t really tell us what medium to long term means), it can still be a difficult line to draw in some cases.
What are clients currently asking about?
We are getting a regular flow of enquiries about UK REIT structures. While it was previously possible for REITs to be owned by only a small number of investors, this involved jumping through a number of hoops. As well as having the REIT shares held by a collective investment scheme limited partnership to get through the close company test, it was also necessary to have a captive listing of the shares and, often, a fragmentation structure to deal with the ‘holder of excessive rights’ rules that restrict holdings of 10% or more. The recent changes to the REIT rules make this much more straightforward. The listing requirement is dispensed with for REITS that are owned as to at least 70% by qualifying institutional investors and the 10% holder rule is now disapplied in respect of investors that are entitled to receive property income distributions without deduction of tax (including UK corporates and pension funds). This added flexibility means that, for the right investor base, the UK REIT has become a much more attractive and flexible option when considering structuring approaches.
Finally, you might not know this about me but….
When I was younger I was lucky enough to spend some time studying and working in Germany. My German is sadly now very rusty, but I try to keep my ear in by listening to German fantasy novels on Audible (think elves, wizards and magic swords). It’s a nice break from work on the train journey home – and I’m sure the rather specialist vocab will come in handy one day...
There’s a good mix of things on at the moment. While market conditions have had an impact on the number of new listed funds being launched, there’s still a strong appetite for raising private fund capital. One interesting project is a new credit fund where we are looking at the UK’s qualifying asset holding company regime as an alternative to more traditional jurisdictions like Luxembourg. The regime has a lot to offer but feels more complicated than it needs to be (especially around the ‘ownership condition’). Aside from that, I’m advising on a number of property joint ventures, a group reorganisation and a steady flow of M&A and financing transactions.
What do you know now that you wish you’d known at the start of your career?
I would remind anyone at the start of their career to always step back and look at the bigger picture. The details matter in tax – and you have to get them right – but it’s easy to get bogged down in the minutiae. Stopping to talk something through with a colleague is usually the best way to get a fresh perspective and is always worthwhile.
If you could make one change to tax, what would it be?
A clear safe harbour in the QAHC rules for credit funds involved in loan origination would be helpful. Under the activity condition, a QAHC has to be carrying on an investment business, not a trade. Although HMRC has published some useful guidance that clarifies that loan origination is not in itself a problem, and it has indicated that holding investments for the ‘medium to long term’ will generally be ok (though HMRC doesn’t really tell us what medium to long term means), it can still be a difficult line to draw in some cases.
What are clients currently asking about?
We are getting a regular flow of enquiries about UK REIT structures. While it was previously possible for REITs to be owned by only a small number of investors, this involved jumping through a number of hoops. As well as having the REIT shares held by a collective investment scheme limited partnership to get through the close company test, it was also necessary to have a captive listing of the shares and, often, a fragmentation structure to deal with the ‘holder of excessive rights’ rules that restrict holdings of 10% or more. The recent changes to the REIT rules make this much more straightforward. The listing requirement is dispensed with for REITS that are owned as to at least 70% by qualifying institutional investors and the 10% holder rule is now disapplied in respect of investors that are entitled to receive property income distributions without deduction of tax (including UK corporates and pension funds). This added flexibility means that, for the right investor base, the UK REIT has become a much more attractive and flexible option when considering structuring approaches.
Finally, you might not know this about me but….
When I was younger I was lucky enough to spend some time studying and working in Germany. My German is sadly now very rusty, but I try to keep my ear in by listening to German fantasy novels on Audible (think elves, wizards and magic swords). It’s a nice break from work on the train journey home – and I’m sure the rather specialist vocab will come in handy one day...
.jpg?sfvrsn=335a554c_0 "300 x 250 (MPU)")