Co-ownership Authorised Contractual Schemes – new rules for offshore vehicles
Wed 23 Nov 2016
Finance Bill 2017 will contain new legislation clarifying the rules on capital allowances, chargeable gains and investments by ‘Co-ownership Authorised Contractual Schemes (CoACS) in offshore funds. Also, operators of CoACS will become subject to reporting obligations.
A CoACS is a pool of assets held and managed on behalf of investors who are co-owners of the assets. It may take the form of a limited partnership or be formed under contracts between the depositary, the operator and the investors.
These schemes were introduced in 2013 as a fiscally transparent vehicle for international funds. Current investors include insurance companies, pension funds and real estate investors. The investment industry had raised questions on the practicalities of allocating capital allowances to investors in some CoACS funds. The government also wanted to clarify what information CoACS funds should provide to investors and to HMRC to enable investors to pay the right tax.
Following HMRC’s consultation Authorised contractual schemes: reducing tax complexity for investors published in August, legislation will be included in Finance Bill 2017 together with secondary legislation which will clarify the rules on capital allowances, chargeable gains and investments by ‘Co-ownership Authorised Contractual Schemes (CoACS) in offshore funds. The legislation will also place information reporting requirements on the operators of CoACS.
Details are not yet available but the legislation should address whether investors have the necessary qualifying activity to claim capital allowances, whether and when they have an ‘interest in land’ sufficient to claim for fixtures and what level of information the CoACS operator should provide to HMRC to enable investors to calculate income and chargeable gains.
For more information contact Ian Thomson (ian.thomson@mazars.co.uk) or Paul Clement (paul.clement@mazars.co.uk).
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