Treasury has published a Call for Input on the UK funds regime. It views Brexit and the emergence from the pandemic as an opportunity to improve the funds regime to give a wider range of more efficient investments which are better suited to investors’ needs. The call for input follows consultation on the tax treatment of asset holding companies, which is now subject to a further detailed consultation, but the call also poses a number of questions on the taxation approach to various types of fund and structure.
In terms of regulation, Treasury notes the wide range of structures of funds and differing regulatory treatments, and says the UK needs to continue to support a range of structures, suits the wide range of investor objectives and investor needs in the UK and accommodates a diverse range of underlying assets. It has been lobbied to create additional structures, mainly for long-term, illiquid asset investment and to meet the needs of AIFs for professional investors. The government is also aware that asset managers would sometimes prefer to use authorised fund structures even when they need not do so, and is keen to understand the benefits managers feel this would bring.
The call discusses the QIS as a flexible yet authorised structure, which counts as an AIF, may take a number of structures and is flexible on its permitted investments. In FCA terms, it is an NMPI, which limits its investor scope compared to UCITS and NURS, but is broader than many offshore funds. The consultation asks how the QIS can be made more attractive.
The call then looks at a suggestion for a “Direct2Fund” dealing model, which would remove the Authorised Fund Manager as a counterparty to the investor deal.
Finally, and more widely, Treasury seeks views on future opportunities and asks where it should focus its attention. It looks at proposals it has received for new structures – the “Long-Term Asset Fund” and a range of unauthorised scheme structures.
The call closes on 20 April.