§ Mr. Stephen O'BrienTo ask the Chancellor of the Exchequer what assessment he has made of the impact on the venture capital industry of taxing carried interest through income taxing rather than capital gains tax. [127078]
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§ Dawn PrimaroloThere has been no change to the taxation of carried interest and therefore no assessment has been made of the impact of taxation of carried interest on the venture capital industry. The tax treatment of carried interest has not been changed by the introduction of Schedule 22 in Finance Act 2003.
§ Mr. Stephen O'BrienTo ask the Chancellor of the Exchequer what discussions he has had with the British Venture Capital Association in respect of taxation measures announced in the Budget; and if he will make a statement. [127079]
§ Dawn PrimaroloA meeting took place between the British Venture Capital Association (BVCA) and Inland Revenue officials on 9 June to discuss the impact of the new legislation in Schedule 22 Finance Act 2003 and this was followed by exchanges of correspondence. On 25 July, the Revenue published on their website two "Memoranda of Understanding" between the BVCA and the Inland Revenue clarifying, respectively, the Income Tax treatment of carried interests in Venture Capital Limited Partnerships and the Income Tax treatment of Managers' Equity Investments in Management Buyouts. They have also published on their web-site guidance on the income tax treatment of "Earn-outs" which are often a feature of venture capital arrangements.