[F1809EZADisguised investment management fees: charge to income taxU.K.
(1)Where one or more disguised fees arise to an individual in a tax year from one or more investment schemes (whether or not by virtue of the same arrangements), the individual is liable for income tax for the tax year in respect of the disguised fee or fees as if—
(a)the individual were carrying on a trade for the tax year,
(b)the disguised fee or fees were the profits of the trade of the tax year, and
(c)the individual were the person receiving or entitled to those profits.
(2)For the purposes of subsection (1) the trade is treated as carried on—
(a)in the United Kingdom, to the extent that the individual performs the relevant services in the United Kingdom;
(b)outside the United Kingdom, to the extent that the individual performs the relevant services outside the United Kingdom;
and for this purpose “the relevant services” means the investment management services by virtue of which the disguised fee or fees arise to the individual in the tax year.
(3)For the purposes of this Chapter a “disguised fee” arises to an individual in a tax year from an investment scheme if—
(a)the individual performs investment management services directly or indirectly in respect of the scheme under any arrangements,
(b)the arrangements involve at least one partnership,
(c)under the arrangements, a management fee arises to the individual directly or indirectly from the scheme in the tax year (see section 809EZB), and
(d)some or all of the management fee is untaxed;
and the amount of the disguised fee is so much of the management fee as is untaxed.
(4)For the purposes of subsection (3) the management fee is “untaxed” if and to the extent that the fee would not (apart from this section)—
(a)be charged to tax under ITEPA 2003 as employment income of the individual for any tax year, or
(b)be brought into account in calculating the profits of a trade of the individual for the purposes of income tax for any tax year.
(5)In subsection (4) “trade” includes profession or vocation.
(6)In this Chapter “investment scheme” means—
(a)a collective investment scheme, or
(b)an investment trust.]
Textual Amendments
F1Pt. 13 Ch. 5E inserted (with effect in accordance with s. 21(4) of the amending Act) by Finance Act 2015 (c. 11), s. 21(1)