1. JPUTS and recent CGT Changes
Mathew Du Val
Senior Associate, Jersey
Nick Ghazi
Associate, Jersey
24 October 2019

2. WHAT ARE THE CHANGES?
Level playing field for UK residents and non-UK residents
Taxation on capital gains for non-UK resident corporates
Transparency/exemption elections
Will depend on structure – take appropriate advice
Elections/restructuring

3. RISKS
Double taxation
Mixture of exempt/non-exempt investors – risks for exempt investors
April 2019 rebasing – gains?
Existing structures – failure to act
April 2020 deadline for elections for existing structures
Exit

4. JPUTS - a recap No separate legal personality
Baker trust – income transparency
SPVs v regulated TrusteeCos
Trust instruments – relevance for changes

5. EXEMPTION / “FUND” ELECTION
If JerseyCo, can you bring within exemption election regime?
CIV requirement
Restructuring options
JerseyCo > JPUT / other transparent CIV
JerseyCo > REIT
Ongoing reporting requirements
Suitability for widely held structures
Timing – election must be made with effect from 6 April 2019 or can be made later with up to 12 months’ retroactive effect

6. TRANSPARENCY ELECTION
Existing/new transparent structures
Unanimous investor consent
Irrevocable
Suitability for more private structures
Existing structures – April 2020 deadline
Can hardwire requirement into JPUT trust instrument

7. TRANSPARENCY ELECTION – RESTRUCTURING OPTIONS
JerseyCo > JPUT/LP?
Elect for transparency by April 2020
Refinancing = ideal time

8. EXAMPLE STRUCTURES - LPs
Jersey LP holding UK property directly = no changes (LPs already transparent and not affected by changes)
Jersey LP with subsidiary JPUT = JPUT to make transparency election by April 2020
Jersey LP with subsidiary JerseyCo(s) = restructure JerseyCo(s)
Jersey LP makes exemption election – although note reporting requirements

9. EXAMPLE STRUCTURES - JPUTs
JPUT holding UK property directly = make transparency election by April 2020
JPUT with subsidiary JerseyCo(s) = restructure JerseyCos and either (a) both to make transparency election by April 2020 or (b) JPUT makes exemption election
Will depend on various factors – take advice

10. EXAMPLE STRUCTURES - JerseyCo
Take advice on availability of exemptions
Restructure into a JPUT
Convert to a REIT or become owned by a REIT or “fund”

11. TIMING
April 2019 rebasing – lack of gains to crystallise (in most cases)
Restructuring – anti-avoidance rules
Refinancing – opportunity to make election
Banks will prefer lending to non-opaque structures – reduce risk of CGT liability on enforcement
Changes to trust instrument – requirement to make an election
New structures/acquisitions – structure as advised
Uptick in new JPUTs/REITs

12. REITs Requirements Closed-ended company UK tax resident
Listed on recognised stock exchange (e.g. TISE)
75% of business must relate to property investment
90% of property rental income must be distributed to investors

13. REITs
Uptick in REITs – many individual REITs with assets > £1 billion
Ideal for significant portfolios with exempt investors
TISE – recognised stock exchange
Listing rules expected to be updated in late 2020
HMRC consultation
Experience in the local market

14. Mathew Du Val Nick Ghazi Senior Associate, Jersey Associate, Jersey
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