The just-published draft guidelines to toughen tax rules for offshore funds may drive hedgies from the U.K., lawyers across the pond are warning. Paul Hale, a partner with the law firm Simmons and Simmons, told the Financial Times that Revenue & Customs proposals were aggressive and not justified in law and will make it hard to sell London as a place for hedge fund managers to come to. The Investment Management Association, upon release of the tax proposal, charged that the guidelines were too complex and would undermine HF managers confidence in the U.K. system and drive them to friendlier locales, such as Dublin and Luxembourg. John Neighbour, a KPMG tax partner, says the stricter rules are a response to the perception that some fund managers have played a little fast and loose. Meanwhile, on the other side of the globe, China plans to introduce in the next couple of weeks a new policy to cut taxes for venture capital and private equity firm to encourage them to invest in Chinese companies. Under the policy, p.e. and VC firms that return at least 20% may be entitled to a lower tax rate, according to Liu Jianujun, a spokesman for Chinas National Development and Reform Commission, told Shanghai Daily.