Volume 3: November 2020

Virtual Asset Manager Roundtable webinar, Introduction to new A&M Taxand Financial Investors team members, Market update from Ocorian, COVID-19 update: Companies House filing extension, Incentivising management teams in uncertain times and FTSE 350: Executive Remuneration Trends 2020.

A&M Taxand Webinar: London Asset Manager Roundtable

A&M is hosting its second Virtual Asset Manager Roundtable webinar on 18 November 2020. This webinar will provide an overview of tax and commercial issues that Asset Managers may be facing in the current climate with a market update being provided by Daniel Parry (Managing Director), a discussion on reporting risk for funds provided by Orion Ganase (Senior Director), a IR35 overview provided by Tracey Norton (Senior Director) and an overview of the market and the financial impact of COVID-19 provided by our Transaction Advisory Group team.

Sarah De Ste Croix (Counsel) of Stephenson Harwood LLP will be discussing COVID-19 regulatory risk with Daniel Parry.

Presentation Topics:

• Introduction;
• Market Update;
• Reporting Risks;
• IR35;
• Overview of the Market and Financial Impact of COVID-19; and
• COVID-19 Liquidity Regulatory Risk.

Please register here for login details to the event. We hope to see you there. 

Introduction to A&M Taxand newest Financial Investors team members

We are delighted to announce the further expansion of our team as James Arrowsmith (Director), Jonathan Brecker (Assistant Director), Samuel Lacey (Associate) and Sam Collett (Analyst) have joined A&M Taxand in London in recent months. We are delighted to welcome James, Jonathan, Samuel and Sam to boost our team capabilities. 

James joined A&M Taxand in London on 5th October to help build out our private client offering in the UK. As a dual US/UK tax advisor, James will also work closely with the wider tax team in the UK and our teams in the US, providing joint US/UK personal tax expertise.

James has more than 10 years of experience advising high net worth individuals, fund executives, lawyers, entrepreneurs and family businesses in the UK with a US connection. Prior to joining A&M he spent most of his career with Frank Hirth in their private client team. Throughout his career, James has worked closely with clients and their trusted advisers to provide US and UK income and capital gains tax advice and compliance, gift and estate advice and residence and domicile planning.

Jonathan joined A&M Taxand in London on 7th September bringing more than 8 years of experience in private client tax. He advises individuals and families with substantial wealth on all aspects of tax but has a particular interest in advising internationally mobile clients and non-domiciliaries in meeting their personal and business objectives.

Jonathan also works with our Funds team advising investment managers on all tax matters which often includes carry structuring and succession planning.

Samuel Lacey joined A&M Taxand in London on 2nd November after just over 3 years at EY where he predominantly advised PE houses on their cross-border tax compliance affairs, tax efficient fund structuring and providing general UK tax advisory services to PE houses and their executives.

Sam Collett joined A&M Taxand in London on 1st September from Frank Hirth. He specialises in US and UK private client tax, primarily focusing on compliance and advisory work for American individuals living in the UK.

Market update from Richard Hansford, Director at Ocorian

As we race towards the end of what has been a turbulent year for financial markets and the wider economy, many private asset fund managers are turning their attention to 2021 to assess what the next calendar year may look like for their business.

Despite the strong headwinds the fund management industry faces, there are signs that the next 12-24 months could see significant growth in investment activity. With fundraising figures in private equity remaining high and the long-term nature of returns, investors, managers, advisers and regulators continue to recognise the importance of private markets in the global economy. With this however, comes the ever-evolving regulatory landscape and increased scrutiny on long-term value creation.

As a global fund administrator operating across 16 jurisdictions, we understand the pressure fund managers are under not only to deliver returns, but to create sustainable long-term products and operate streamlined and cost-effective structures. Some of the issues we see include:

• Handling substance requirements for certain jurisdictions - classification of entities, immobility of boards to convene in domicile, navigation and submission of filings and ongoing reporting.
• Global taxation - use of offshore domiciles, introduction of tax changes to capture cross-border revenues.
• Long-term value and ESG - continued scrutiny by stakeholders and investors on implementing an effective ESG or sustainability strategy. Further enhanced as the European Union bring in The EU Regulation on Sustainability-Related Disclosures in March 2021.  
• Brexit and AIFMD II - many firms still grabble with how marketing, distribution and licensing will look from 1st January and with the European Commission having recently issued a consultation paper reviewing AIFMD (due to close on the 29th January) it is likely that changes to authorisation, marketing and valuation rules will significantly impact EU and non-EU firms.

Whilst 2020 has been challenging, the spotlight continues to shine on private asset managers to drive the yield investors need. With this comes increased regulatory scrutiny to drive investor protection, demonstrate good governance and generate financial returns whilst investing for social and economic good.

In times of volatility the need for a trusted, independent service provider that understands the fund management landscape is crucial in enabling fund managers to focus on their core competencies such as portfolio monitoring and investment management. At Ocorian, we provide our funds clients with an end-to-end service platform that relieves them of the burden of complex regulatory and tax compliance. Whatever the structure, strategy or domicile, we can provide a customised and scalable solution to suit the investment need so fund managers can navigate the evolving regulatory landscape.

COVID-19 update: Companies House filing extension

Earlier in the year, HMRC announced that from 25 March 2020 companies could apply for a three-month account filing extension on Companies House.

This announcement has since been modified and, from 27 June 2020, all filing deadlines have been automatically extended by three months for certain key statutory filing events, including the filing of company accounts.

For example, for private companies and Limited Liability Partnerships, the deadline for filing accounts has been extended from 9 months to 12 months following the end of the accounting period. These extended filing deadlines will be in place until 5 April 2021.

Incentivising management teams in uncertain times

PE firms are facing a situation where multiple portfolio companies are looking for guidance and support for their employees during this crisis.

Management Incentive Plans (“MIPs”) are a common tool used by PE houses to align management’s interests with that of the investors. After taking steps to recover and stabilise from the COVID-19 crisis, portfolio companies should prepare for growth and it is an opportune time to either re-visit an existing MIP and / or implement a new MIP.

To review our full article on incentivising management teams, please see the link here.

FTSE 350: Executive Remuneration Trends 2020

Remuneration Committees are now considering how the impact of COVID-19 should be appropriately treated in remuneration outcomes, and also how remuneration policy and incentive structures can support business strategy when we emerge from the pandemic.

Issues vary by company and by sector, so a tailored approach is essential. The increasing acceptance amongst many shareholders of a wider variety of incentive schemes, coupled with the prevailing exceptional circumstances, may provide a unique opportunity to seek closer alignment between strategic goals and remuneration outcomes.  This could also be a time to reconsider how remuneration is structured throughout the organisation.

To review our full annual report into FTSE 350 executive remuneration, please see the link here.

If you have any questions about the content covered in this newsletter, please contact one of our tax experts.