Legal briefing | |

Government makes amendments to qualifying assets company (QAHC) rules

Overview

The government has tabled amendments to the draft legislation contained in the Finance Bill introducing the new QAHC regime. The regime, which is due to come into force from 1 April 2022, confers wide-ranging tax benefits on QAHCs.

The amendments are technical, with the main change being to the "ownership condition". This is one of the requirements a company must meet to be a QAHC and, essentially, is met where the company is at least 70% owned by "good" investors". Those investors are called "category A investors" and include "qualifying funds".
 
Under the change, one of three categories of "qualifying fund" is to be replaced so that, instead of applying to a fund that, broadly, is "close" for tax purposes solely because of an investment in it by another category A investor, it instead applies to funds that are 70% controlled by category A investors. The other two categories of qualifying fund (collective investment schemes that satisfy a diversity of ownership test and non-close funds) remain the same. This change is consistent with the principle that QAHCs should be at least 70% owned by category A investors (as the previous test could generally be satisfied if there was majority ownership of the fund by Category A investors) but raises the bar slightly for meeting the ownership condition for certain fund types. 
 
For more information on QAHCs please see our earlier briefing: Qualifying Asset Holding Company Regime | Travers Smith