The Investment Management Association in the UK has called on the Government to abolish the fund-spe...
The Investment Management Association in the UK has called on the Government to abolish the fund-specific Stamp Duty Reserve Tax regime, which it said is making UK funds "less marketable" than their European counterparts. It believes that the cost of any abolition would be offset by the increased business and employment tax from the industry if funds were not domiciled offshore due to more favourable tax treatment.
A report issued by the IMA and accountant KPMG puts the tax loss to the Treasury at £720,000 for every £1bn of funds domiciled offshore, instead of in the UK.
The IMA's members provide investment management services to funds totalling approximately £456bn domiciled elsewhere. The body stressed that, had these funds been domiciled in the UK, the Government would have received approximately £328m of additional tax revenue per annum from the industry.
The IMA also called for an urgent resolution to the VAT treatment of investment management services provided by UK firms to offshore funds, so that UK managers will be able to continue to recover the input VAT they offer related to those services.
"We must ensure the UK's tax regime is certain, predictable, simple and therefore competitive," said IMA chief executive Richard Saunders. "Otherwise, we could be in danger of hindering the further development of the UK as a global centre for investment management, which would in turn impact the UK tax take. We have made some progress on a number of points thanks to open dialogue with the Treasury and HMRC, and ask for further progress in the pre-Budget report."
Meanwhile, latest figures from the IMA show non-UK domiciled assets under management up on a year ago, while onshore funds have seen more than £30bn of outflows since last August. Overseas domiciled fund assets held in the UK stood at £18.5bn at 31 August 2008, up from £16.2bn a year earlier, while UK domiciled funds under management fell from £457.2bn to £426.5bn over the same period. However, onshore funds showed positive net retail sales of £90m in August (compared with £741.1m in August 2007), while overseas-domiciled funds saw net outflows of £37.6m (compared with outflows of £211.1m last August).
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