Funds and Partnerships services (US connected)

Investment fund structures have a huge task in both navigating and complying with complex tax rules, and in satisfying investor tax and reporting requirements. The relationship with each investor is of the utmost importance. Furthermore, they will require accurate and timely information in order to preserve this relationship. Whether the issues stem from the need of US investors, or non-US investors reporting US-sourced income, the investor will, more often than not, look to the Fund for assistance and guidance. We have deep industry knowledge required to help their investors on both sides of the Atlantic.

If you have US investors, it is important to structure the Fund and its investments correctly from the outset, so that they do not fall within the scope of US anti-deferral legislation and are able to meet their extensive informational reporting requirements. There is a complex administration required when completing annual reports, and when allocating fund income, losses, gains and deductions between members.

In addition, UK investors will desire non-UK-based funds to register for reporting fund status in the UK and will expect UK-equivalent income reporting, in order to comply with their reporting requirements.

Without proper planning and assessment of the US and UK tax exposures, it is not uncommon for penal tax regimes to apply in one or both jurisdictions.

The failure to meet with the ever-burdensome tax compliance obligations with both the Internal Revenue Service (IRS) and HM Revenue & Customs (HMRC) can also lead to significant civil, and in some cases, criminal penalties.

Our professionals work with our clients to identify and oversee all of the above obligations to limit risk and maximise tax efficiency. Our awareness of the tax rules — applying in both the UK and the US — allows us to help our clients recognise that appropriate structures and procedures are in place, whilst we can additionally help relieve many of the compliance burdens. 

Those working in traditional partnerships continue to have many complex issues to contend with. 

For US tax purposes, allocations of partnership income, losses and deductions need to comply with specific principles known as "substantial economic effect". Where partnerships have US participants this means that specialist US tax and accounting advice is required. On the other hand, for US partnerships, the need to provide information to members with respect to the new ‘qualified business income deduction’ has increased their administrative burden.

The UK also has many complex rules in place, including those related to mixed members, disguised self-employment income, salaried members and most recently, changes to basis periods. US law firm partners are also know to have many specific tax complexities, especially in relation to complying with the UK remittance rules.

Our professionals have experience in all of the above issues, and can  advise to confirm that the tax affairs of both partners and partnerships are efficiently structured. We are also there to assist with the US and UK tax compliance requirements of both partners and their partnerships.