Finance Bill: Government to legislate for Reserved Investor Funds
New UK unauthorised contractual scheme fund vehicle with lower costs and more flexibility than existing authorised scheme to be introduced
New UK unauthorised scheme to be introduced
A Treasury consultation on the introduction of the Reserved Investor Fund (Contractual Scheme), also known as the RIF, was launched last year and closed on 9 June 2023. The RIF is a new UK unauthorised contractual scheme fund vehicle with lower costs and more flexibility than the existing authorised contractual scheme. The Government published the consultation responses on Spring Budget Day and confirmed its intention to legislate through the Spring Finance Bill with more detailed rules to follow in secondary legislation.
Clause 20 of the Spring Finance Bill makes provision for the Treasury to make further regulations applying the tax regime for authorised co-ownership schemes to unauthorised co-ownership schemes meeting the eligibility conditions for RIF status: being an unauthorised co-ownership scheme, that is an Alternative lnvestment Fund (AIF), participation in which is limited to professional or large investors and meets any other requirements set out in the secondary legislation (to follow). This aligns with the broad framework of the RIF regime as it was set out in the consultation document and the response published on 6 March 2024.
Clause 20 then provides that the regulations ‘may’ make further provision in relation to: eligibility conditions (including the types of property a RIF can hold); procedural requirements for becoming or remaining a RIF; the tax consequences that follow a RIF meeting or ceasing to meet eligibility conditions; the accounts that must be kept in relation to a RIF; and requiring information and notices to be submitted to HMRC. Clause 20 also provides that regulations may set certain conditions to be met and may allow RIFs to remedy breaches of those conditions in order to become or remain a RIF.
We will have to wait and see what the detailed secondary legislation provides and whether this will be more or less in line with what has already been announced at the Spring Budget.
In the meantime, the Government is intending to engage further with stakeholders on the policy design for the RIF. KPMG in the UK is participating in the relevant Treasury working group and as such, should you wish to provide any feedback for us to consider for our input into this process, please contact the author or your usual KPMG in the UK contact.
