Emily Szasz

Financial Markets and Funds Partner Neil Robson recently spoke with Grip about the FCA’s announcement granting firms temporary flexibility to comply with the "naming and marketing" rules under the Sustainability Disclosure Requirements until April 2, 2025. Neil welcomed the extension, stating, “The naming and sustainability rules will require firms that have ESG indicators within their name to actually follow the referenced requirements. For example, if a manager has a ‘sustainable investment fund,’ it will need to ensure that the majority of the investments it invests in are actually sustainable. Divesting from some investments will take time, particularly where they are illiquid — hence the FCA time extension.” Learn more: https://bit.ly/3B3cTER #FCA #SDRCompliance #SustainabilityDisclosure #ESG #Sustainability

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In a crucial development for those in the Funds industry , the new UK government has published a call for evidence regarding taxation of carried interest. Link in the comments below 👇 The government has referred to the current carried interest tax rates as a "loophole" (🤷‍♂️) , and Chancellor Rachel Reeves has indicated that she would consider increasing capital gains tax rates (28%) on carried interest to income tax rates (45%). The call for evidence is consistent with a broader policy of ending tax breaks for wealthy expatriates (non-doms) and imposing VAT on private school fees. Both the call for evidence and prior comments by Rachel Reeves suggest that that the carried interest tax treatment may continue where fund managers put their own capital at risk. This may be referring to the carried interest statutory regime in France which requires carry holders to subscribe for an amount equal to 1% of total fund commitments to have a reduced tax rate on receipt of carry. In addition, it is promising that the Treasury is keen to engage with the asset management community, and the call for evidence helpfully says: "The government will seek to protect the UK’s position as a world-leading asset management hub, recognising that the sector channels vital investment across the UK, and will play an important role in this government’s mission to boost economic growth." We at #dlapiper are preparing responses to the call for evidence and very much intend to be part of the conversation with HM Treasury and HMRC. Please reach out if you would like to know more! #funds #tax #carriedinterest #assetmanagement

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Still processing elements of the FTT’s decision on recovery of VAT on legal fees in Visual Investments. But here are a few (possibly trite) thoughts inspired by the facts of the case: 🔸 Adding lots of parties to an engagement can be messy – consider VAT at contract and invoicing stages and maximise clarity over who is supplying what to whom 🔸 Legal fees – especially where they relate to unusual/one-off things – should raise a modest alarm. Often VAT will be incurred for (taxable) business purposes, but sometimes it won’t 🔸 The concept of cost components is central to the VAT system, but it often ties us up in knots Decision here: https://lnkd.in/eMfeZ2VU Views my own

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I found the Q&As covering the upcoming UK merger control reforms along with the one-page handout setting out key facts and figures particularly helpful #DMCCBill #DMCCAct #digitalmarkets #ukmergercontrol #competitionlaw #AddleshawGoddard

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Amendments to the AIF Regulations were notified today – the key changes are: 1. The maximum extension of tenure for LVFs has been capped at 5 years, subject to approval from two-thirds of the unit holders taking away the earlier flexibility to extend the tenure without any cap per the fund documents. 2. Category I and Category II AIFs continue to be permitted to borrow and undertake leverage for temporary funding and day-to-day operational requirements, for not more than 30 days, not more than 4 times in a year and not more than 10% of the investible funds but subject to conditions to be specified by SEBI. These conditions are yet to be specified. 3. Category I and Category II AIFs are permitted to create encumbrances on the equity of investee companies in certain infrastructure sub-sectors, but only for the purpose of the investee company borrowing and subject to conditions specified by SEBI. #AIFRegulations #SEBI #AIFs #Funds Pallabi Ghosal

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🚨 The UK's Autumn Budget 2024 has introduced major changes that could reshape the venture capital landscape. Key updates include the taxation of carried interest, capital gains tax rate increases, and the extension of the EIS and VCT schemes. For a deep dive into these changes and what they mean for your investments, read our latest article here: https://lnkd.in/g-SDXjNP #VentureCapital #TaxPlanning #UKTax #DWFGroup

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🚨 The UK's Autumn Budget 2024 has introduced major changes that could reshape the venture capital landscape. Key updates include the taxation of carried interest, capital gains tax rate increases, and the extension of the EIS and VCT schemes. For a deep dive into these changes and what they mean for your investments, read our latest article here: https://bit.ly/3UOvAmv #VentureCapital #TaxPlanning #UKTax #DWFGroup Jon Stevens James Cashman Caroline Colliston Tom Rank

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Work is progressing towards launch of the new PICES exchange whilst we await the consultation response. There might be a scaling back of ambition regarding access to the platform so we're keen to get your views on what you think of the proposals, if you'd want to use it (or at least be prepared so you can) and other comments you have so we can continue to shape our dialogue and technical input contribution with stakeholders in this process accordingly. Make your voice and views count by replying to our survey below ⬇ #PICES #PrivateCompany #ShareLiquidity

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In the context of the announcement by the Chancellor of the abolishing of the UK's non-dom regime, as well as the removal of the concept of domicile from the UK tax system (and the closing of loopholes created by the previous adnimistration), is establishing TRUE non-UK residence going to be the only way for current non-doms to limit UK taxation?

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Here's one I was desperately anticipating on IHT: 'The test for whether non-UK assets are in scope for IHT will be whether an individual has been resident in the UK for at least 10 out of the last 20 tax years immediately preceding the tax year in which the chargeable event (including death) arises. The time the individual remains in scope after leaving the UK will be shortened where they have only been resident in the UK for between 10 and 19 years. For those who are resident between 10 and 13 years, they will remain in scope for 3 tax years. This will then increase by one tax year for each additional year of residence. So, if a person was resident for 15 out of 20 tax years on leaving, they would remain in scope for 5 years; if resident for 17 out of 20 tax years on leaving, they would remain in scope for 7 tax years.' I guess that's some improvement on the initial proposal for a 10-year IHT tail!

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What could be the potential impact on UK law firm ownership rules if Germany passes a proposed law to allow non-lawyers to own firms? My colleague Corinne Staves comments in the below article: #partnershiplaw #lawfirms #llps #lawfirmmanagement

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What has the ICAEW got to say about PE investment into regulated firms? They also want to discuss this early in the transaction. https://lnkd.in/eKteQhyV

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So, I’m delighted for the parties and their advisors, this is just an incredible result from a merger clearance perspective… … but, it does raise some pretty fundamental (and frankly uncomfortable) questions for the CMA going forward, given that: 🤙 this merger was a 4:3, where the CMA acknowledged that the parties were very close competitors, and that prices would rise for 27 million consumers; 🤙 the CMA had previously argued against every other 4:3 in Europe on the basis that ‘nothing’ can replace competition between MNOs and certainly not MVNOs (that are just retail competitors, not infrastructure players); 🤙 the sector (telecoms) has huge barriers to entry (ie, there may never be another MNO entrant in the UK); and 🤙 the CMA has now accepted purely behavioural remedies and, not just behavioural, but unprecedented in the CMA’s history, a price control (for three years) and a (binding) commitment to invest. No structural remedies (ie divestitures). And all of this in one of the most important consumer facing markets, mobile, which is a gateway to so many other types of content we all consume 📱💿🕹️📡⌚️🛜 🚀 When a 4:3 telecoms merger can be cleared on novel behavioural remedies, we are looking at a paradigm shift in UK merger control. It will be far harder in future for the CMA to credibly challenge mergers in any market, including tech markets, particularly those with many more players, where the parties are not close competitors, or concerns rest only on highly speculative theories of harm, with little or no evidence, or for the CMA to reject behavioural remedies in even highly concentrated markets. So, we may be looking at: ⬇️ an irreversible down-grading of merger control and ex ante intervention; and ⬆️ perhaps - with the DMCCA - a big step towards regulation and market management. If Ofcom can do it in telecoms, including now managing these Vodafone / Three remedies, the CMA will say, sure we can do it with the DMU in tech! 🔄 Only time will tell if that will be the case.

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The Supreme Court has held that a foreign #bankruptcy trustee cannot under common law obtain assistance from the English court in relation to dealing with real estate situated in England. This marks a limit to the principle of modified universalism. The reasoning behind the decision goes back to the "immovables rule", under which only English law applies to immovable property in England (and the English courts will generally recognise the effect of a foreign law over foreign property, as an aspect of each jurisdiction's sovereignty). Assistance may be available to an #insolvency officeholder under the Insolvency Act or the Cross-Border Insolvency Regulations in an appropriate case. Those statutory routes were not available here and the Supreme Court held that it should not plug that gap by judicial law-making. The facts of this case demonstrate that COMI shifting before a bankruptcy or winding up order is made by a foreign court may be effective to allow the insolvent to retain control of English real estate. For those dealing with situations in which insolvency and private international law collide, the Supreme Court's decision may well be the most important since Rubin v Eurofinance. The blogpost below, written together with my Herbert Smith Freehills colleagues, Maura McIntosh and Matthew Leake, digests this important judgment.

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At the present time, it feels like none of the political parties, or the public at large, are aware of just how much non-doms contribute to the UK economy. However, seeing The Guardian publish a piece like this gives me hope that the government (and any future government) will take note of how disastrous the announced changes would be. As Bassim Haidar notes, there is a better way forward that would increase the UK tax take: https://lnkd.in/dsUkfvsx

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Carried interest in the UK (and beyond) is under the spotlight. With enormous thanks to Adam Le and his team at the PEI, I am very pleased to have shared thoughts on the proposed changes to UK tax rates on carried interest. We discussed a range of points: • what is the current tax rate on carry, including the effective tax rate? • possible motivations for the Labour government to raise tax rates on carry? • is there a risk of a mass-exodus of UK carry holders leaving the UK? • why is carry subject to capital gains tax rates? • what does "capital at risk" mean? • how does UK tax rates compare to other European countries? • should the UK look to adopt a flat tax rate? Please see the link below, and I have set out the Spotify link in the comments below. #carriedinterest #fundstax #investmentfunds

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Last week, the UK court of appeal (CoA) issued a highly anticipated verdict in the Blackrock Holdco 5, LLC case on UK interest deduction rules (https://lnkd.in/eEFBCC6Z). For a discussion of the upper tribunal (UT) judgement, see here https://lnkd.in/enZgctmM. In this case, a UK resident company (LLC 5) took out a shareholder loan for a minority interest in a US target structure (the rest was held by LLC 5’s shareholder). The UT denied interest deduction was based on (1) transfer pricing (TP) rules, as a third party would have required a covenant for access to dividend flow from US target and (2) unallowable purpose as LLC 5’s existence was tax motivated (interest deduction, with losses to be group relieved). The wide, HMRC favourable reading on both parts caused controversy and doubts in practice. On TP, CoA overturned the UT and argues there is no need to reject third party comparables for theoretical risks that do not apply in a group context. In other words, the loan is comparable to third party loans that where a borrower controlled the dividend flow (whether directly or though a group covenant). So, the TP unease seems mostly resolved. On unallowable purpose, CoA limited the UT verdict by holding that only the purpose of the loan should be considered, inevitable consequences of the loan do not equate purpose and not all acquisition debt has an unallowable purpose. The taxpayer’s defence on this point was “It Never Entered My Mind” (https://lnkd.in/eNJdGzMQ) and indeed, CoA accepts that the board approved the structure on its non-tax merits. But, CoA concludes “[h]owever it might be dressed up, LLC 5 became a party to the Loans to obtain a tax advantage” and “[t]he board obviously understood what the Loans were designed to achieve”. CoA infers this from LLC 5’s place in the structure and the lack of LLC 5’s non-tax function in relation to the US acquisition – an inference CoA considers so strong that all interest cost had an “unallowable purpose”. Purpose tests are always slippery. Mental states like purpose cannot be directly observed. CoA’s inferring purpose from abstract factors illustrates this and provides little comfort for future cases. Group structures usually include so many intertwined decisions and there will always be a risk of HMRC linking the minds of decision makers to an unallowable purpose. As firm conclusions usually appear impossible, conservative taxpayers will not assume interest deduction. Ironically, that might help. An overly simplified description of these rules highlights the underlying paradox: as long as you don’t think you’ll get a deduction, your deduction is safe. Obvious disclaimers: this is not advice. These views are my own and do not necessarily represent my employer.

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Today the UK's Takeover Panel proposed sweeping changes to the jurisdictional framework of the UK Takeover Code. If implemented, these amendments would simplify the regime significantly and remove a number of companies from the regulatory net and provide welcome clarity to market participants. Read more in our latest article: https://ow.ly/j64E50RnjKy

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Our latest legal business opus, meticulously crafted with the eloquence of a bard and the precision of former legal virtuosi - [we utterly reject the term “failed lawyers”!] - is out today. A testament to jurisprudential enlightenment; it’s the ‘War and Peace’ of Law firm-on-law firm internecine conflict, the ‘Hamlet’ of Big Law intrigue, and the ‘Pride and Prejudice’ of legal recruitment. A riveting page-turner at the confluence of legal theory, philosophy, and commerce, featuring all the shenanigans of Big Law, whilst simultaneously addressing the thorniest and most profound jurisprudential issues of our time, which have continued to captivate scholars and jurists alike since before the Code of Hammurabi.   We address the truly significant questions: “Who’s in? Who’s out?”, “which law firms hired, and which law firms lost, the most partners?” … and, perhaps the most profound question of all, the one which strikes at the very foundation of the Rule of Law upon which the whole Western world’s legal system rests and which has been uttered, in oh so many different ways, by astonished lawyers and legal academics throughout the common law world since at least 1189 CE [which for the odd non-jurist who can’t quite remember is, of course, when English law defined “Time Immemorial”]: ...“I was at law school with [INSERT NAME], he/she was [CHOOSE AT LEAST ONE] lazy/ stupid/ creepy/ a pervert, how on earth did he/she manage to get into THAT firm? … where did I go wrong?”   … OK, those were two profound questions, but I am sure the answer to the latter involved you not speaking to Edwards Gibson.   In any event, The Publication of Record for the London Legal market - The 80th Edition of Edwards Gibson’s Law Firm Partner Moves is out today.   Click below for a free PDF copy:  https://lnkd.in/ei68RWCx  [Translation into ancient Babylonian, written in cuneiform, and carved into a seven-foot-tall basalt stele available at extra cost].  #lawyers #lawfirm #attorney #recruitment #Biglaw

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