Tax Issues in Private Equity - A 2 Day Masterclass

Introduction

This 2-day course looks at private equity from the perspective of the investor, the private equity company, the investee and the private equity house.

The course deals with how private equity structures are dealt with for tax purposes, looking at both the opportunities and the risks in this area.

Private equity has come in for a significant amount of attention in the press in recent times with allegations of aggressive tax avoidance.

The course will explore the facts behind the headlines and discuss the optimum tax structures for clients and will comprise of analysis of corporate, international and employment tax issues.

What You Will Learn

This course will cover the following:

Day One - Corporate Perspective

Brief refresher on the economic architecture of private equity funding including

• Comparisons with listed equity structures
• Financing arrangements
• Advantages and disadvantages of private equity structures

Typical fund structures, including

• Vehicles involved
• Where partners invest in the structure
• Capital v loans (UK v non-UK partnerships)
• Returns
• Example structures - debt and equity considerations, junior, mezzanine and senior debt

Day Two - Investor Perspective

The tax deductibility of interest looking at

• CIR - Corporate Interest Restrictions
• Unallowable Purpose
• Thin Capitalisation

Tax impact for investors and managers:

• Carried interest - the conditions for CGT treatment and the current controversies
• Alternatives to carried interest including growth shares
• DIMF and co-investment carve-out
• IBCI and capital based carry (at a high level) and what reporting is required
• Examples of tax impact of differing investments
• Utilisation of BVCA agreement regarding shares given to managers in private equity and the use of ratchets
• Setting incentivisation hurdles for employees
• FA2014 anti-avoidance rules - disguised investment management fees
• Domicile and sourcing of earnings
• High risk areas open to HMRC challenge
• Areas for potential tax planning including examples