Family investment companies (FICs) have become popular in recent years as an alternative to trusts, for the long-term management and preservation of family and intergenerational wealth. FICs are also used to pool family investment assets to educate a younger generation on the stewardship of wealth. We explained the advantages of these structures in a post from 2019.
The increasing popularity of FICs and the way they have been marketed led to concerns about increased HMRC scrutiny. Those concerns seemed well founded when it emerged that HMRC had set up an internal team in 2019 with the specific purpose of looking into FICs.
However, it has recently been confirmed that HMRC’s research into FICs has finished and the internal team has been disbanded. Minutes of a meeting published by HMRC explain that ‘there was no evidence to suggest that there was a correlation between those who establish a FIC structure and non-compliant behaviours. As with any analysis of a taxpaying population, the same broad range of tax-compliance behaviours were observed, with no evidence to suggest those using FICs were more inclined towards avoidance.’
While this is clearly positive news, HMRC refused to confirm whether or not it would seek to introduce legislation aimed at FICs in the future.