The UK Government has indicated it will remove the controversial taxation proposals in its overhaul ...
The UK Government has indicated it will remove the controversial taxation proposals in its overhaul of the offshore funds regime, which were expected to negatively affect hedge funds.
Earlier this year, the Inland Revenue proposed to implement taxation changes in the offshore funds market.
The proposals for mark- to-market taxation caused concern as they would have seen UK investors in hedge funds paying income tax on an annual basis, rather than allowing them to defer tax payments.
In a further consultation paper released on 27 November, the HM Treasury said it had received a number of responses pointing out the hedge fund conflict.
Nigel Doran, a tax partner at London-based law firm Macfarlanes, said although there is no express statement in the Treasury's response summary document that it will be dropped, it is unlikely to proceed.
'The Treasury has asked the Inland Revenue to work on new rules that will provide equivalent treatment for offshore and onshore funds and this makes mark-to-market unlikely as there is no mark-to-market in the UK at the moment,' said Doran.
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