The government issued a response to its consultation on permitting the creation of Asset Holding Companies in the UK yesterday. In the summary it said:
At Budget 2020, the government announced a consultation on the tax treatment of asset holding companies in alternative fund structures.
Three important themes arose from the consultation responses.
First, respondents suggested that the scale of the UK's asset management sector, its good infrastructure and skilled workforce would make this a competitive location for asset holding companies (AHCs) if barriers in the UK tax system could be addressed.
Second, respondents said that the establishment of AHCs in the UK could bring economic and fiscal benefits, primarily by bolstering the asset management sector and creating additional jobs in associated service sectors.
Third, respondents set out areas where the UK tax rules currently create barriers to the establishment of AHCs. Many agreed with the suggestion that the government address these barriers through a new regime for AHCs. Respondents also proposed changes to the UK's existing Real Estate Investment Trust (REIT) regime, to better allow UK REITs to serve as AHCs for investment in real estate.
The government has carefully considered the responses and believes that there is both a clear policy justification and a strong economic and fiscal case for reform in this area.
As the consultant noted:
Asset Holding Companies (AHCs) are companies used as intermediate entities in investment fund structures. Their role is to facilitate the flow of capital, income and gains between investors and underlying investments.
The government understands that, despite the wider strengths of the UK as a financial services hub and despite the commercial benefits identified by industry to locating these entities alongside UK fund management activities, there are barriers in the tax system to the establishment of AHCs in the UK.
The consultation looked to improve the government's understanding of AHCs, the fund structures in which they are commonly used, the commercial drivers for their location and the fiscal and economic benefits that they bring to the jurisdiction in which they are located.
It also explored the barriers that the UK tax system might be creating for the establishment of AHCs in the UK, the merits of taking steps to remove these barriers and the different options to do so.
Let me summarise this as succinctly as I can, and without becoming too technical.
What an AHC does is facilitate tax haven activity.
They encourage the flow of funds through a jurisdiction with little or no tax being paid.
They do, as a result, hire out the benefits of a legal system to those with wealth who would rather not pay for the benefits that they secure from living in a society whose existence they would rather deny.
They fuel inequality.
They encourage a race to the bottom in corporate taxation.
They promote financialisation - that is, the extraction of value from society without adding any value to it.
They undermine the accountability of capital.
They result in the misallocation of capital by permitting the overstatement of the return to financial engineering, so undermining the return to human endeavour.
They are, therefore, an inherent abuse within a market system that is bound to reduce the overall availability of capital for productive purposes.
They can, then, only be promoted by anti-capitalists whose aim it is to undermine the effective operation of market mechanisms.
Apart from all that, they have everything going for them.
Welcome then to post-Brexit Singapore-on-Thames, where only the wealthy matter. This is the UK's brave new world.
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[…] And yet it does have time to talk about.how to make the UK a more effective tax haven. […]
The agenda of those behind and funding Brexit has always been clear from their past statements and track record. A low tax, small state economy. A centre for tax evasion and money laundering. Slashed standards for environment, labour, health and the rest with low pay and job insecurity seen as part of a ‘flexible’ economy. In every sense a race to the bottom.
Whatever it’s faults, the EU has generally raised standards and is slowly clamping down on tax avoidance. That’s why these people want to escape its orbit. Their campaign based on xenophobia and racism was a cover for their real agenda.
That is becoming increasingly clear
They’re not even being subtle about it now:
https://splash247.com/uk-flag-overhaul-looks-to-singapore-for-inspiration/
Interesting timing. Is it deliberately trying to make a Brexit deal harder by reminding the EU what the real Tory agenda is?
Hard to know
I would have waited if I was them
The clue is in the deliberate use of an anodyne seeming name – which, in worst Orwellian terms, conceals and even misrepresents, what is going on. The dishonesty of purpose is patent.
As a rule you can spot the nastiest think tanks and groups by inverting their meaning ; The Taxpayers Alliance, The European Research Group , etc
I wonder if those in the former Red Wall, know just how much they are being stuffed (along with the rest of us).
What a pity that those in these areas who thought they’d give the ‘elite’ a kicking didn’t bother to do a bit of research into thre backers of Brexit. They might have found out that they are the very same people who reduced these areas to their current state, ie. Thatcher’s heirs.
And that these people are the real elite in the UK (especially so in England). The guillibility and laziness of much of the English electorate is utterly depressing.
AHCs are transparent to tax, and have a structure similar to LLPs.
I assume you don’t have a problem with LLPs? So what is the problem with AHCs?
They are not transparent to tax
And they are not LLPs
They are tax free conduits and that is something very different indeed
Am I surprised?
No.
And this (and stuff like ‘freeports’) is what I think is making the EU so wary.
Though when comparisons are made with Singapore, it’s not quite the low regulation, small state the Tories think it is. In areas such as health, housing, education they are almost ‘socialist’ in their provision. Cross their financial regulators and you’ll find yourself in prison, unlike the soft touch regulators in a London. They’ve also got a pretty clean record on corruption as well.
But then, Lee Kuan Yew started off pretty much as a communist – a complex man. Authoritarian but at the benevolent end of dictatorship. Way ahead of any of the current shower we have whom Im sure he would have despised.
No, I’m not suggesting them as a role model – their treatment of low paid immigrant workers is pretty grim for a start – but they are not quite what our small state de-regulators think they are.
Sp[ot on
Not much of a free market either -0 much of it state-controlled
And land ownership is a long way from the Tory dream
I visited Singapore a lot for work (and lived in that part of the world for many years as a child). Watched a great interview with LKY on TV talking about building another terminal at Changi airport. He described how this was a 25 year decision about the future direction of Singapore so how could you possibly expect ‘the market’ to make that kind of decision!
Those Tories who talk about Singapore really have not got a clue. I understand that its also true that the Chinese and Deng Xiaoping took many of their ideas on ‘state capitalism’ from Singapore.
Having lived here some time and read up on the pre- and post-independence periods, I agree with much of what you say; apart from that LKY was “pretty much as a communist”. He was very much anti-communist, but not blindly so; he retained the ability to examine the communists dispassionately, appreciate the things that they did well (such as organising people), and blend those strengths into his business-friendly model. It was precisely his lack of ideology (communist, capitalist, or Confucian) that gave free rein to his pragmatism and enabled Singapore to thrive by cherry-picking various bits from various systems.
Someone with such a vision would certainly stand out from the current UK system of entrenched tribalism.
Thats a pretty fair summary, in particular that he did not cling to any particular ideology and felt free to pick and choose. A pragmatist. My understanding was that he did start on the left but quickly saw the underlying threat from the communists and was ruthless in eliminating them. The 2 volumes of his biography are worth reading for those interested in that part of the world, or just in how countries develop.
What amuses me is how those on the right choose to ignore his distinctly socialist attitudes to areas such as health, housing and education and his ‘dirigiste’ attitudes to business and industry. At the same time, how those in the development world studiously ignore the lessons from places like Singapore, Malaysia and Thailand that have developed relatively successfully despite their colonial legacy.
The City will of course look after itself with no regard for the well-being of the rest of the country.
An AHC is a form of parasite for the greedy. Sovereign currencies are the safest assets available precisely because they offer the “collateral” of enforceable retirement principally taxation. The evasion of taxation globally is aimed at restricting the burden of taxation to the not-so-rich. A divide-and-rule strategy in this country the Tories have been engaging in for centuries.
Sometimes it back-fires on them like the United States where colonists lacked sufficient British specie medium of exchange because most of it was returning to the UK for importing British goods to the colonies hence the introduction of bank notes by individual state colonies.
Fortunately, for the Tories most voters actively undermine their democratic ability to stop the Tories divisiveness out of sheer monetary and economic ignorance. The most obvious current one is the government’s state bank must balance its books after its Covid largesse because that’s what bank’s have to do innit!
In my opinion if the increasing gap between the poor and the wealthy is to be reversed there needs to be a push back against current levels of neoliberalism. AHCs will surely only increase the gap between the poor and the wealthy by strengthening the rentier economy.
Is it too soon to say … I told you all so?
I am pretty certain with all the driving I have been doing around London these last few months, that all the infrastructure has been built and the last of the new skryscraper housing for the new City drones are being completed. All these Docklands and Olympic Village mini Singapore’s are ready to throw out all the key worker subsidised householders and bring in their loyal old servants from their ancestral opium selling fortune factory – HK and as many Indians as you can eat! From Vauxhall (;-$] to Albert Dock – it’s tidal upper reach and it’s OWN airport – they have lied cheated and stolen elections to keep their implacable supremacy alive for a few more centuries.
The cost of the jubilee line and road link between the Old Square Mile and the expanded Isle of Dogs and Albert Docks , with the road closures and functioning TFL anpr BORDER controls, is in every way a mimic of Singapore, a even grander state within a state than the Holy See is about to reveal itself – with its satanic godhead Mamon/ Lud – that has escaped the LEGAL oversight, that it wants for everyone else but itself, as always.
It is indeed a very long term plan . Unfortunately for them I doubt if the SCO/EU/EurAsian/ Africa/South American and SEAsian bloc is going to be as accommodating of being bullied, blooded and robbed blind as they have been for half a millennium already.
BrexShit only ever had ONE plan and it was made 50 years ago.
Isn’t this simply to compete with similar structures in Ireland and Luxembourg?
So you believe to the race in the bottom in tax competition which ends in no tax on capital and all on labour, and that we should unquestioningly endorse this?
This Singapore thing is not about detail but an advertising slogan with the power being in the heads of those who want to hear it. There are many, as voting in England shows. People in Scotland are aghast at what’s happening down south.
These ideas are in “Britannia Unchained” from 2012 written by Liz Truss, Kwasi Kwarteng, Priti Patel, Dominic Raab & Chris Slipman.