IFM36316 - Disguised fees: Condition 2 - A management fee arising to the individual (from 22 October 2015 onwards): Overview

Condition 2 - A management fee arising to the individual (from 22 October 2015 onwards)

ITA07/S809EZA(3)(c)

ITA07/S809EZDA - S809EZDB

The second condition for a sum to be a disguised fee is that under the arrangements a management fee must ‘arise’ to the individual in the tax year.

The requirements for Condition 2 were slightly different prior to 22 October 2015 (IFM36351), as from 22 October 2015, there is legislation (ITA07/S809EZDA and ITA07/S809EZDB) which defines when a management fee arises to other persons or connected companies. Prior to 22 October 2015 a management fee had to arise ‘directly’ or ‘indirectly’ to an individual.

If the sum you are considering has arisen prior to 22 October 2015 you should refer to IFM36351.

Dropping of the concept of ‘directly or indirectly’

The concept of whether a sum has arisen ‘directly or indirectly’ from a scheme does not apply from 22 October 2015.

In the majority of cases the addition to the legislation will not change the effect of the previous wording. The legislation still seeks to draw a line between genuine corporate management vehicles and more passive structures which are put in place to gain a tax advantage in relation to their disguised fee.