TaxCorporate TaxPrivate equity managers win tax reprieve

Private equity managers win tax reprieve

Review concludes there is no case for income tax charge on managers 'ratchets'

Private Equity managers have won a reprieve from a tax charge.

The industry had been anxiously awaiting a review of the rules on managers
shareholidngs. Private equity chiefs often acquire shares at the same price as
other shareholders but see their holding ratcheted up to give them an
entitlement to a higher percentage of the company then they first paid for.

HMRC
released its view on the subject earlier this week, accepting that its attempt
to charge income tax on managers’ gains was untenable in law
.

Experts welcomed the move but cautioned it may not be a lasting settlement.

Paul Megson, Private equity tax expert at KPMG, was quoted in the FT saying:
‘It is good news but it is not entirely clear that the Revenue wouldn’t want to
legislate to get back to the position it had before.’

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