IFM36360 - Disguised fees: Sums arising from funds retained under the Alternative Investment Fund Managers Directive (AIFMD) (Directive 2011/61/EU)

Sums arising from funds retained under the Alternative Investment Fund Managers Directive (AIFMD) (Directive 2011/61/EU)

To comply with requirements under the Alternative Investment Fund Managers Directive (AIFMD) a partnership which is an alternative investment fund manager may retain profits which have been allocated to a partner.

The partnership itself may pay tax on these sums under the provisions at ITTOIA05/S863H-S863K. These sums may be forfeited by the partner if, for example, performance hurdles are not met.

In such circumstances the initial allocation of funds does not give rise to a charge under the DIMF rules because, although the sums are allocated to a partner, the partner does not have access to them.  Consequently, the sums allocated have not ‘arisen’ to the partner.

The sums allocated will arise at the point that the sums are made available to the partner. However, any sums which are taxed would not meet condition 3 (IFM36325).