QAHCs in 2022

11 January 2022

As another New Year dawns, the introduction of the new Qualifying Asset Holding Company (‘QAHC’) regime on 1 April 2022 draws ever closer. The draft legislation released in November 2021 remains largely unchanged aside for some very minor amendments to the eligibility criteria. This reflects the fact that the rules were well considered by the time of their release.

Discussions are intensifying around the usefulness of the regime as the private equity industry digests the detail. The eligibility of QAHCs for treaty relief is emerging as an early advantage compared to Channel Islands holding structures, and the relative ease of meeting treaty substance requirements for UK based firms with a UK structure rather than a Luxembourg holding company is also a tempting feature of the regime for UK managers. 

There is also consideration of getting the best of all worlds, including ways to combine a QAHC with fund partnerships in various other jurisdictions, meaning the benefits could be wider than fully UK structures can offer alone. This is a reminder that until HMRC and the Treasury deal with other issues around the treatment of funds in the UK (not least the VAT position for UK GPs, and the carried forward loss relief restrictions), there will still be limits to how much activity the new regime will attract to the UK.

This is clearly still part of a longer journey, but it makes for a promising start to 2022 for the UK private equity industry. See our overview of how the new QAHC rules will work here.