New rules effective from today in the U.K. are likely to have material impact on the tax treatment of payments by a fund to its U.K.-based management executives and service providers. The rules cover many areas of fund manager taxation that previously have not been specifically legislated for in the U.K. Given the haste with which the new rules were constructed and passed into law, it is not surprising that many situations are now being analyzed with a degree of concern, in particular where the rules have had some unexpected, and in some cases, potentially negative effects.

The stated target of the new rules is colloquially known as GP LP planning. However, there is also a view that the new rules will be a useful tool for HM Revenue & Customs (HMRC) to attack planning within the fund management sector that would otherwise be technically sound but does not comply (in HMRC’s view) with the spirit of the U.K. tax code.