Press Release
HMRC OFFERS IMPORTANT CLARIFICATION IN TRADING VERSUS INVESTMENT DEBATE
23 July 2007
In its Revised Statement of Practice (SP) in respect of the Investment Manager Exemption (IME) HMRC has clarified that active management alone should not be taken to constitute a trade. More specifically, neither "shorting" nor the use of derivatives are to be taken as indicative of trading so can be treated as "investing" for tax purposes.
The IME enables UK-based investment managers to provide advisory and management services to non-UK funds without the funds incurring UK tax. It is therefore critical to the UK as an export base for investment management services.
Julie Patterson, Director of Regulation, Operation and Taxation commented:
"The investment manager exemption is an important feature in maintaining the UK's competitiveness in financial services. HMRC's consultative approach has been positive and the revised SP provides a sensible framework going forward. We welcome, in particular, HMRC's willingness to listen to business concerns and to seek to reflect modern investment practices."
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