FIRST MAURITIUS PCC LIMITED - EXECUTIVE SUMMARY: UK

  1. The Aim

    2. To place investment portfolios offshore the UK so that (perfectly legitimately) they may grow without the adverse impact of UK taxes's income and CGT.

  2. The Existing Problem

    3. UK "close company" tax rules provide that gains on direct, wholly-owned offshore holdings are to be taxed to the investor (by attribution) - as if the gains had been made in the UK. The rules also provide that even if the offshore holdings are not wholly-owned by the investor, the Revenue (subject to de minimis rules) must still tax the investor if 5 or fewer persons control more than 50% of the offshore vehicle. Therefore, to avoid "close company" taxation by attribution, the investor must involve himself with other investors through, for example, a Unit Trust or an OIEC (with sub-funds), etc. (and, simultaneously, expose himself to the cross-over liabilities of other investors).

  3. The Solution

    First Mauritius PCC Limited provides a structure which resolves the existing problem. The important starting points are: (1) First Mauritius is an umbrella fund with no cross-over liabilities amongst investors. (2) First Mauritius is not a "close company" under the UK tax rules. (3) Although other offshore vehicles afford the investor protection against the "close company" tax rules, the same vehicles do not protect the investor against cross-over liabilities. Indeed, these vehicles are made deliberately cross-over liability prone because this is the only way in which the "close company" tax rules can be avoided. This absence of cross-over liability protection in the case of Unit Trusts, OIEC's and Gibraltar umbrella funds, etc. itself makes the case in favour of First Mauritius. The First Mauritius structure provides the "good news" without the accompanying "bad news". In other words, the First Mauritius structure avoids "close company" rules and also avoids cross-over liabilities amongst investors.

  4. Bullet Points

    1. Gross roll-ups outside the UK with indefinite deferral of CGT.

    2. No cross-over liabilities amongst investors.

    3. Full Taper relief after 10 years (from the date of the first investment).

    4. Gross reinvestment available.

    5. Structure fees are UK tax deductible and do not incur VAT.

    6. Partial and selected voluntary aggregation of investors' funds enable HNW threshold investments to be accessed (for example, Private Equity Finance Initiatives or Pre-IPO's).

    7. Non-domiciled investors pay no UK tax on income unless remitted.

    8. No IHT for non-domicilaries unless deemed domiciled (17 yr. rule).

    9. UK settlor offshore trusts obtain indefinite deferral of CGT.

    10. Tax treaty benefits (hence, increased net returns on investments).

    11. Ability to invest in the UK without gains attracting UK tax.