Taxation of Chargeable Gains Act 1992 section 103KG

Meaning of "arise" in Chapter 5

Section 103KG defines when carried interest is treated as "arising" to an individual for the purposes of the carried interest rules, including special provisions for deferred carried interest and anti-avoidance measures.

• Carried interest "arises" to an individual only if it arises for the purposes of the disguised investment management fees (DMF) rules in ITA 2007, ensuring no gap between the two regimes
• Where carried interest is deferred (whether conditionally or otherwise), the DMF look-through rule for sums paid to connected companies or unconnected persons is switched off until the deferral ends
• Once deferred carried interest ceases to be deferred, it is treated as arising to the individual at that point, unless none of the "enjoyment conditions" is met and there is no reasonable likelihood any will ever be met
• Anti-avoidance provisions override the deferral relief where arrangements are designed to avoid tax, are not genuine commercial arrangements, or involve reinvestment into a collective investment scheme