Authorised Investment Funds (AIFs) - Mazars - United Kingdom
Authorised Investment Funds (AIFs)
HMRC has announced measures to put an end to a corporation tax avoidance scheme involving UK corporate investors in AIFs such as open-ended investment companies and authorised unit trusts.
The scheme allowed a UK corporate investor in an AIF to claim a tax credit on a distribution from an AIF which exceeded the actual amount of UK tax paid or suffered by the AIF.
To close the scheme, HMRC will make two amendments to the legislation.
Firstly, there will be a restriction on the corporation tax deduction given to the AIF for interest distributions which will reduce the deduction to the extent that the distribution is derived from dividends which are exempt from corporation tax.
Secondly, where an AIF suffers foreign tax, the resulting deemed tax credit in the hands of the UK corporate investor (including other AIFs) will be treated as foreign tax for all purposes and a proportionate part of the income will also be treated as foreign income against which the credit can be offset.
The two amendments take effect on and after 22 June 2010.
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- Copyright 2012 - Mazars - United Kingdom
