A&M Taxand Scotland Asset Managers Briefing Note: Volume 5
Volume 5: August 2020
Introduction to A&M TAXAND Scotland’s newest team members, call for evidence for Capital Gains Tax (CGT) and Pensions tax relief and a Market update from Managing Director, Daniel Parry.
Welcome to our August edition of the A&M Taxand Scotland Asset Managers Briefing Note!
Introduction to A&M Scotland’s newest team members
We are delighted to announce the further expansion of our team as Susan Ross (Director) and Alan Swords (Analyst) have both joined A&M Taxand in Glasgow in July. We are delighted to welcome both Susan and Alan to boost our team capabilities.
Susan joined A&M Taxand in Glasgow on 14th July to build our private client offering in Scotland. Susan will also work closely with the wider tax team in the UK providing personal tax expertise.
Susan has more than 20 years of experience advising high net worth individuals, fund executives, entrepreneurs and family businesses with a special interest in landed estates. Prior to joining A&M she spent most of her career with EY in their private client team. Susan has a proven track record of building strong client relationships through the provision of exceptional client service, often advising multiple generations of the same families.
Throughout her career, Susan has worked closely with clients becoming their trusted adviser to provide income tax advice, residence and domicile planning, capital gains tax and inheritance tax planning. She has advised landed estates on land transactions, land pooling, renewables and diversification and all aspects of succession planning.
Alan joined A&M Taxand in Glasgow on 20th July from KPMG and specializes in private client tax. His primary areas of concentration are tax compliance and advisory.
Office of Tax Simplification’s (“OTS”) “Capital Gains Tax - call for evidence”
In July, the Government instructed the OTS to issue a call for evidence to review the UK capital gains tax (“CGT”).
The OTS have split this call for evidence into two sections and have requested views on the following:
- The principals of CGT and whether its scope and reach in the context of the wider tax system continues to be appropriate (“section 1”); and
- Simplification opportunities across a number of areas which commonly affect individual tax payers, business owners and investors including rates, reliefs and exemptions and how it interacts with other parts of the tax system (“section 2”).
A&M have submitted a response to section 1 of the call for evidence and are due to submit a response to section 2 by 12 October 2020.
Pensions tax relief administration: call for evidence
In July, the Government also issued a call for evidence to review the administration of pensions tax relief.
The government has expressed concerns regarding the potential for low-earning individual’s take-home pay to be affected by the method of pensions tax relief operated by their pension scheme.
The call for evidence seeks to gather views on the operation of the two ways in which pensions tax relief is administered, being net pay and relief at source, and what improvements can be made to address the discrepancy in outcomes for low earners.
Market update from Daniel Parry, Managing Director
After a March and April where funds seemed to be frantically working out what the Covid-19 pandemic was doing to their liquidity and asset valuation, in the last couple of months, firms and advisers we have spoken to are returning to some degree of normality.
Fund raise conversations that went quiet for a few months are now starting up, with a probable six months’ delay (or more). Clients are seeing opportunity in a variety of private equity sectors and certainly in distressed debt, and it seems there is a large amount of dry powder capital around. The conversations we are having show a concern, however, about not just which sectors will recover better than others, but which exact business models and management teams will perform. Some funds have been wondering whether there is a need for recruiting managers with a particular deep sector expertise for certain assets and whether investors might look for funds with a narrower investment strategy and narrower/deeper expertise for post-Covid funds.
There are also a lot of conversations around existing assets, particularly at the tail end of a fund, which may have good future potential, but it is uncertain how long it would take to get there. Liquidity through secondary structures or doing fund extensions are being considered. Aside from the legal and commercial factors of these options, people are thinking about how management fees and carry would work to keep a management team incentivised to carry the assets through to a good sale, rather than concentrate on a new fund or look to move job if carry looks a long way away. Carry resets/adjustments have been mentioned for particular assets and tax valuations are very relevant here.
One of the other main topics is how to navigate the complex co-invest and carry rules (old and post Finance Act 2015) to achieve capital losses on underwater instruments and potentially accelerate those losses. This topic was discussed in our May 2020 newsletter, please see the link here.
