Yesterday the government published its response to the Asset Holding Company (AHC) regime and issued a second round of consultation. The consultation is very encouraging with HMT demonstrating a willingness to tackle all of the major hurdles that make using the UK as an asset holding jurisdiction more difficult. As well as positive developments around having wider (AHC specific) exemptions for capital gains and interest withholding tax, and retaining the capital nature of underlying capital gain on repatriation, the consultation also explores more difficult aspects such as the preserving non-UK source status on the distribution of underlying foreign source profit by a UK AHC.
The timeline is equally optimistic, with draft legislation due to be published during 2021 allowing for a period of technical consultation ahead of inclusion in the 2021 Finance Bill. Given the significant number of questions that the government has raised (some 63 in total) and the short amount of time that the consultation is open (until 23 February) it will be important for asset managers to engage in the consultation to ensure the end result is workable.