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July 10, 2020

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July 09, 2020

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UK Tax Criminal Finances Act 2017 & Hybrid Mismatch – Revised Guidance Published

Criminal Finances Act 2017

The UK Criminal Finances Bill has received Royal Assent. This new Act introduces several new criminal offences for corporate bodies that facilitate tax evasion, and changes to the proceeds of crime legislation. Of particular note is the creation of new offences for companies which fail to prevent their staff from facilitating tax evasion in the UK and abroad.

Hybrid Mismatch – Revised Guidance Published

On 31 March 2017, HMRC published revised draft guidance on the hybrid mismatch rules. These rules came into force for UK companies on 1 January 2017, but there is still considerable uncertainty over their scope and application. This is particularly the case in relation to "imported mismatch" legislation, which has been introduced into UK legislation in a manner that goes beyond the OECD's final Report on the subject, and in some circumstances can deny a UK tax deduction for interest paid to a foreign lender where there are hybrid features in the upstream financing structure. Unfortunately, the opportunity has not been taken to clear away uncertainties in this, and other, areas of the legislation.

© 2020 Proskauer Rose LLP. National Law Review, Volume VII, Number 137


About this Author

Stephen Pevsner UK Tax law partenr Proskauer Rose private fund formation eorganisations, structured finance, investment funds

Stephen Pevsner is a tax partner and a member of the Private Investment Funds and Private Equity M&A groups. Stephen's practice covers the broad range of corporate and individual tax advice, with particular emphasis on private fund formation across a wide range of buyout, debt and infrastructure asset classes, as well as UK and international M&A transactions (often private equity backed). He has wide experience in corporate reorganisations, structured finance, investment funds and new business set-ups, and also advises regularly on a wide range of employee and fund manager...

Robert Gaut, Proskauer Rose, UK Tax Lawyer, Investment Attorney, Finance

Robert Gaut is a tax partner and head of our UK tax practice in London.

He has represented many of the world’s preeminent multinational corporations, sovereign wealth funds, investment banks and private equity funds on a full range of UK and international tax strategies relating to inbound and outbound transactions, capital markets offerings, establishment of investment funds and financing matters.

Recent representative transactions include:

  • Advising Ares Management LP, the leading global alternative asset manager, on the international tax aspects of its initial public offering, raising US$216 million in the first IPO by a major private equity firm since the Carlyle Group went public in 2012

  • Advising Virgin Media in the tax aspects of its US$23.3 billion acquisition by Liberty Global

Catherine Sear, Proskauer, Private Investment Funds Lawyer, Tax Legislation Attorney

Catherine Sear is a partner in the Tax Department and a member of the Private Investment Funds Group.

She focuses on the tax aspects of private investment fund structuring, including the structuring of carried interest and executive co-investment arrangements as well as tax issues relating to the establishment and operation of fund management businesses. She provides advice to fund managers on the tax aspects of private equity, venture capital, infrastructure, real estate and debt funds, including funds of funds, and has particular experience of...