Ben Eaton (pictured), a UK tax partner in Goodwin Procter’s London office, comments on the Finance Bill 2015 draft clauses published by the UK government…

In labelling some payments to investment managers as “disguised fee income”, this is the latest example in a trend on the part of HMRC to label many perfectly commercial arrangements as some other type of arrangement “in disguise” in order to collect a greater amount of tax.  If this approach continues to become more widespread it will sow further uncertainty into our already over-complex tax regime.  

While the Government’s confirmation that this legislation isn’t targeted at carry and other performance based arrangements is welcome, it appears from the draft legislation that its scope extends to payments that would not normally be viewed, from a commercial perspective, as fees.