The government has [today] published a consultation proposing fundamental changes to the way that the UK currently imposes VAT in relation to fund management fees.
If adopted these proposals should significantly enhance the attractiveness of the UK as an asset management centre, allowing fund managers not to charge VAT on their fees whilst at the same time fully recovering their own input VAT. The proposals include:
- that the management of all AIFs should be zero rated. This would ensure that there was no VAT on management fees, but would permit input tax recovery for fund managers; and
- zero rating extending to management of the new qualifying asset holding company (QAHC) (the corporation tax regime for which is due to come into effect from next April (2022)).
If adopted these proposals should significantly enhance the attractiveness of the UK as an asset management centre.