TaxPersonal TaxTerra Firma CEO leaps to private equity defence

Terra Firma CEO leaps to private equity defence

Buyout giant Guy Hands defends low tax rates for private equity remuneration

Guy Hands, the chief executive of Terra Firma, has made a robust defence of
the taxation of private equity bosses, arguing that the low tax rate they enjoy
is fully justified.

In a letter to the Financial Times, Hands said that the carried
interest paid out to buyout bosses should only be taxed at 10% as it rewarded
risk and entrepreneurship.

‘While the definition of carry may vary across private equity firms, it was
originally intended to cover a payment to individuals of a private equity firm
who invested their own money,’ Hands said.

He questioned whether listed company executives would be happy to accept the
same level of risk as private equity heads did in order to enjoy a lower tax
rate.

‘I do wonder how many FTSE100 chief executives would be prepared to take the
risk of abolishing their bonuses and option schemes in return for capital
gains-based carry which would only start to be paid if they delivered real
shareholder value in excess of 8% compound over a seven-year period,’ Hands
said.

Hands also issued a veiled criticism at veteran buy-out heads who had
benefited from the low tax on carried-interest in the past but had now publicly
criticised the tax rate.

‘These grandees and private equity critics might all do well to think through
the long-term consequences of any proposals they make, rather than playing to
the gallery,’ he said.

Further reading:

Go here to find out why carried interest has become so
controversial

Steps the Treasury could take to tax
buyout bosses at a higher rate

Read what the Unions have to say about
private equity taxation

Related Articles

HMRC appeal rejected in Tottenham Hotspur case

Administration HMRC appeal rejected in Tottenham Hotspur case

2w Emma Smith, Managing Editor
HMRC urged to clarify impact of income allowances on Self-Assessments

Personal Tax HMRC urged to clarify impact of income allowances on Self-Assessments

2m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

2m Emma Rawson, ATT Technical Officer
Wealthy individuals could circumvent top tax rate rises

Personal Tax Wealthy individuals could circumvent top tax rate rises

4m Alia Shoaib, Reporter
Italy grants first successful non-dom status application to former UK non-dom

Personal Tax Italy grants first successful non-dom status application to former UK non-dom

4m Emma Smith, Managing Editor
Industry reaction: Taylor Review does not go far enough in addressing tax issues

Legal Industry reaction: Taylor Review does not go far enough in addressing tax issues

5m Alia Shoaib, Reporter
Does the Taylor Review sufficiently address the gig economy?

Corporate Tax Does the Taylor Review sufficiently address the gig economy?

5m Alia Shoaib, Reporter
HMRC tax evasion assistance requests double in five years

Corporate Tax HMRC tax evasion assistance requests double in five years

5m Emma Smith, Managing Editor