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The Investment Managers (Investment Transactions) (Cryptoassets) Regulations 2022 add ‘designated cryptoassets’ to the investment transaction list for investment manager exemption purposes.
1(1) confirms the rules in force from 1 January 2023, provided that they apply:
- The rules were made for the accounting period for corporation tax current on the date (19 December 2022) and for subsequent accounting periods, and
- Up to 2022/2023 tax year and subsequent years for income tax.
What are ‘designated cryptosets’?
Regulation 2(2)(b) states that a cryptoasset is a designated cryptoasset unless it falls within the exclusions set out in 2(2)(b)(i) to (iii).
The definition of cryptoasset used is contained in the OECD’s ‘Crypto-asset Reporting Framework and Amendments to the Common Reporting Standard’ which was published on 10 October 2022.
Cryptoassets that are excluded are those that represent rights in respect of:
- A transaction that does not already fall under the list of investment transactions
- Property, a transaction which does not already fall under the list of investment transactions
- Provision of services if those rights are exercised when the asset is held by a non-resident.
However, cryptoassets are not excluded if they represent rights with respect to another cryptoasset that is itself a designated cryptoasset.
2(3) has a further exclusion which means that while a transaction may be in a designated cryptoasset, it is not a specified transaction for the purposes of 2(1) i.e. it is not an investment transaction. This is where designated cryptoassets are created or issued:
- Non-UK resident
- An investment manager acting on behalf of that non-UK resident, or
- A non-UK resident or a person connected to an investment manager acting on their behalf.
HMRC will publish further guidance on these rules in due course, any technical queries should be directed to investmentmanagerexemption@hmrc.gov.uk.
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