On the one hand, London currently boasts being hedge fund central in Europe; on the other hand, hedgies may find doing business in the U.K. too taxing. Grumblings over the latest revisions in tax law across the pond are getting louder, and so are the threats that London may some day become a hedge fund ghost town. HMRC – Her Majesty’s Revenue & Customs – according to tax partner Philip Davis of Ernst & Young, is “killing the goose that lays the golden egg.” This is presenting a golden opportunity for other jurisdictions – largely Guernsey, Jersey, the Channel Islands and even Cyprus – to lure the disenchanted. One large hedge fund in the U.K. told Financial Times that the imminent new tax on offshore may give HFs “no choice but to wind up to go offshore.” The new tax regime – which could have hedge funds jumping through hoops to get exempt from taxes as the tests for it are reportedly becoming more subjective -- are prompting hedge funds to find friendlier onshore venues; there are also the quality-of-life issues of less crime and an easier commute in these new ports. So far, says FT, none of this seems to scare Treasury into reconsidering its position; the agency reportedly has said it was “happy with the corporate tax level,” and noted that a recent survey by KPMG indicates that companies ranked tax concerns as only the sixth most important factor when considering relocating.
