Qualifying Asset Holding Company (QAHC) Regime

# Qualifying Asset Holding Company (QAHC) Regime

The Qualifying Asset Holding Company (QAHC) regime is a special tax regime designed to allow investors in certain UK holding companies to achieve a similar tax outcome to investing directly in the underlying assets. If your company qualifies and enters the regime, it benefits from specific tax treatment, but you must meet strict eligibility criteria and fulfil ongoing notification requirements.

What is a QAHC?

A QAHC is a company that holds and manages investment assets on behalf of investors. The regime ensures that a QAHC is taxed on profits relating only to the activities it performs, rather than on the underlying investment returns, which are instead taxed at the investor level. This creates "tax transparency" – meaning investors are taxed as if they held the assets directly.

The regime is intended for investment fund structures and requires companies to meet specific eligibility conditions before they can enter.

Entering the QAHC regime

To enter the QAHC regime, your company must meet all required eligibility criteria. Before entering, you should review the detailed eligibility criteria in HMRC's Investment Funds Manual to ensure your company qualifies.

Making an entry notification

You must make an entry notification to HMRC before your company can enter the regime. This notification must be made electronically through HMRC's online service – notifications made by any other means will not be accepted as valid.

To complete an entry notification, you need:

• Company name
• Unique Taxpayer Reference (UTR) of the company (if you have one)
• Date of entry – this must be after the date you make the notification
• A declaration that the company will meet all required eligibility conditions at the date of entry

If your company is not UK resident when making the notification, you also need to provide:

• Territory of current residence
• Company registration number
• Date the company intends to become UK resident – this must be no earlier than the date of entry

The ownership condition exception

There is one eligibility criterion – the ownership condition – that you may not meet immediately. If you cannot meet this condition when entering the regime, you must make a different declaration as part of your entry notification. You must declare that your company:

• Will meet all required eligibility criteria at date of entry, except for the ownership condition
• Reasonably expects to meet the ownership condition within the first 2 years of the date of entry

Annual QAHC information returns

At the end of each accounting period, you must submit a QAHC information return to HMRC. This is separate from and in addition to your company tax return.

The information return must include:

• Company name
• Company UTR
• Name, address and UTR of the person (or partnership) who provided investment management services to the company during the accounting period
• An estimate of the total market value of the assets of the company's ring fence business at the end of the accounting period
• Total gross proceeds from disposals of assets from the ring fence business during the accounting period
• Amounts of any payments made by the company on redemption, repayment or purchase of its own shares

The due date for the information return is the same as the filing date for your company tax return for the relevant accounting period.

Penalties for late filing

If you do not submit the information return by the due date, your company will face a fixed penalty of £300.

Other notifications you must make

Once your company has entered the QAHC regime, you must notify HMRC if certain events occur. These include:

• The ownership condition has been breached within the first 2 years
• There is no longer a reasonable expectation of meeting the ownership condition within the first 2 years
• One of the eligibility conditions has been breached and the company has exited the regime
• The activity condition has been breached and you wish the company to enter a cure period
• The ownership condition has been breached and you wish the company to enter a cure period
• The ownership condition has been breached and you wish the company to enter a wind-down period
• The company has entered a wind-down period and subsequently acquires assets or raises capital
• You wish the company to voluntarily exit the regime

Each of these notifications must be made separately through HMRC's online service. You cannot send more than one type of notification at once – if you need to make multiple notifications, you must use the service multiple times.

How to make notifications

All QAHC notifications must be made electronically through HMRC's online service. To use the service, you will need to:

• Sign in using your Government Gateway user ID and password (you can create one if you don't have one)
• Use your email address to receive a confirmation code to sign in

Once you submit a notification, you will receive confirmation from HMRC.

Getting help

If you are unsure whether your company meets the eligibility criteria, you can review HMRC's Investment Funds Manual or submit a non-statutory clearance application to HMRC.

For questions about completing notifications or other QAHC-related queries, you can contact HMRC by:

• Email: qahc@hmrc.gov.uk
• Telephone: 0300 051 5900
• Post: Wealthy and Mid-Size Business Compliance, HM Revenue and Customs, BX9 1QW

Sources

• Make a qualifying asset holding company notification to HMRC
• Notes for completing notifications for the qualifying asset holding company (QAHC) regime

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.