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New tax transparent vehicle will significantly increase UK financial services competitiveness

Deloitte estimates that more than £20billion of additional multinational pension fund investments will be made in the UK

23 November 2010

Deloitte welcomes the announcement today by the Financial Secretary to HM Treasury, Mark Hoban MP, that Britain will launch a new tax transparent vehicle in the UK.1 A tax transparent vehicle is an entity which allows beneficial double tax treaties between investors and investments to be accessed.

Gavin Bullock, a Deloitte partner commented: “Over the past ten years Deloitte has worked closely with multinational companies and investment management groups in establishing tax transparent investment vehicles. For multinationals these have resulted in material economies of scale and improved governance for their international pension funds. In addition, leading investment managers have gained a competitive edge by taking advantage of the tax efficiencies that these vehicles can offer.

“Today’s announcement is a proactive move by the Treasury that will significantly increase the competitiveness of the UK financial services sector. Countries such as Ireland and Luxembourg which have already established tax transparent vehicles had gained a competitive advantage that lead to the establishment of centres of asset management activity outside the UK.

“In terms of assets invested in tax transparent vehicles, we would estimate that around £20billion of additional multinational pension fund investments would be made in the UK each year. The potential for third party investment management funds to be transferred to such vehicles will be far more significant. This is due to the ability of the tax transparent vehicle both to support a master-feeder fund structure, and allow asset managers to realise economies of scale through fund rationalisation.

“This is a great opportunity for the UK to enable UK companies and fund managers to increase their competitive performance and to encourage those providers considering setting up a tax transparent vehicle to look again at the UK, especially in response to regulatory changes such as those under UCITS IV.2


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Notes

1. A copy of the speech by Mark Hoban MP can be found on the Treasury website: http://www.hm-treasury.gov.uk/speech_fst_221110.htm

2. Undertakings for Collective Investments in Transferable Securities Directive.

About Deloitte

In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

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