[[103KFAElection for carried interest gains to be chargeable as scheme profits ariseU.K.
(1)An individual (“A”) may make an election under this section in respect of an investment scheme (“the relevant scheme”) if—
(a)section 103KA applies in relation to A and the relevant scheme, or
(b)it is reasonable to expect that it will apply in relation to A and the relevant scheme.
(2)Subsection (3) applies for a tax year (“the relevant tax year”) where an election made under this section has effect for that tax year.
(3)A chargeable gain is deemed to arise to A in the relevant tax year and is to be treated as accruing to A immediately before the end of the relevant tax year.
(4)The amount of the gain is the amount given by reducing—
(a)the amount of carried interest that would arise to A in the relevant tax year in the circumstances mentioned in subsection (5), by
(b)the sum of chargeable gains deemed to arise to A under this section in respect of the relevant scheme in previous tax years.
(5)Those circumstances are that—
(a)all of the investments held by the relevant scheme in the relevant tax year, and previously held by the scheme, whose disposal would be relevant to A’s entitlement to carried interest, were disposed of in the relevant tax year,
(b)the amount realised on the disposal of each investment that was not actually disposed of in, or before, the relevant tax year were the amount of the costs to the relevant scheme in acquiring that investment,
(c)all income that was received by the scheme (whether before or during the relevant tax year) and that would be relevant to A’s entitlement to carried interest, were received in the relevant tax year, and
(d)all profits realised by the scheme as a result of those disposals and the receipt of that income were distributed to its investors in the relevant tax year.
(6)Where—
(a)distributions were made by the scheme to external investors before the relevant tax year, and
(b)the timing of those distributions affects the amount of carried interest that actually arises to A,
the amount of carried interest to be presumed to arise in the circumstances mentioned in subsection (5) is to reflect the fact those distributions were made before the relevant tax year.
(7)But if reflecting that fact would lead to a presumption that an amount of carried interest had arisen before the relevant tax year, any such amount is to be presumed to arise in the relevant tax year.
(8)A chargeable gain treated as accruing to an individual under subsection (3) is a chargeable gain accruing on the disposal of an asset situated outside the United Kingdom only to the extent that the individual performs investment management services in respect of the relevant scheme outside the United Kingdom.
(9)An election under this section—
(a)must be made by notice given to an officer of Revenue and Customs, and
(b)may not be revoked.
(10)A notice making an election—
(a)must state the first tax year for which it is to have effect, and
(b)may not be given after 31 January following the end of that tax year.]]