This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.
You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/6767837.stm
The article has changed 16 times. There is an RSS feed of changes available.
| Version 3 | Version 4 |
|---|---|
| Equity bosses start MP testimony | |
| (about 1 hour later) | |
| The bosses of private equity firms have started giving testimony to a select committee of UK MPs over the behaviour of their industry. | |
| The heads of firms such as KKR, 3i and Permira are testifying before the Treasury select committee. | |
| It is investigating whether the sector - accused of using too much debt to finance deals and cutting jobs - needs tighter regulation and to pay more tax. | It is investigating whether the sector - accused of using too much debt to finance deals and cutting jobs - needs tighter regulation and to pay more tax. |
| Reports have said the bosses will admit their sector is currently under-taxed. | Reports have said the bosses will admit their sector is currently under-taxed. |
| Thanks to tax breaks, private equity firms currently pay just 10% tax on gains made on companies they invest in. | Thanks to tax breaks, private equity firms currently pay just 10% tax on gains made on companies they invest in. |
| Private equity funds have increasingly hit the headlines in recent years, snapping up a growing number of UK companies, such as pharmacy group Alliance Boots. | Private equity funds have increasingly hit the headlines in recent years, snapping up a growing number of UK companies, such as pharmacy group Alliance Boots. |
| It could be very un-clever to put a heavy tax regime on to the private equity market John Moulton, Alchemy Partners Q&A: Private equity debate | |
| Private equity executives pay taxes on their basic pay and bonuses, but a large part of their income comes from carried interest, or the 20% slice of profits they can claim once they have paid back their investors. | Private equity executives pay taxes on their basic pay and bonuses, but a large part of their income comes from carried interest, or the 20% slice of profits they can claim once they have paid back their investors. |
| This money is classed as a capital gain and, as such, is subject to a tax level of 10%. Critics say it should be charged at a normal tax rate. | This money is classed as a capital gain and, as such, is subject to a tax level of 10%. Critics say it should be charged at a normal tax rate. |
| Transparency | Transparency |
| Speaking to the BBC's Today Programme, private equity boss John Moulton conceded that many people involved in the industry were paying little or no tax, but he said it would be unwise to change the system. | Speaking to the BBC's Today Programme, private equity boss John Moulton conceded that many people involved in the industry were paying little or no tax, but he said it would be unwise to change the system. |
| "If the government increases the tax on the private equity industry sharply, a very large chunk of it can move offshore and go from paying some tax to paying no tax," said Mr Moulton, who is chairman of Alchemy Partners, the fund that tried unsuccessfully to buy Rover cars. | "If the government increases the tax on the private equity industry sharply, a very large chunk of it can move offshore and go from paying some tax to paying no tax," said Mr Moulton, who is chairman of Alchemy Partners, the fund that tried unsuccessfully to buy Rover cars. |
| So it could be very un-clever to put a heavy tax regime on to the private equity market." | So it could be very un-clever to put a heavy tax regime on to the private equity market." |
| Recent years have been a golden age of British wealth creation Robert Peston, BBC business editor Read Robert's blog in full | Recent years have been a golden age of British wealth creation Robert Peston, BBC business editor Read Robert's blog in full |
| Last week, Peter Linthwaite, the head of the British Private Equity and Venture Capital Association, which represents the UK's private equity industry, unexpectedly resigned after he was widely criticised for a weak showing before the committee. | Last week, Peter Linthwaite, the head of the British Private Equity and Venture Capital Association, which represents the UK's private equity industry, unexpectedly resigned after he was widely criticised for a weak showing before the committee. |
| Regarding the taxation of the private equity industry, the Treasury select committee is looking at four main areas: | |
| |
| Concerning transparency, it is studying such factors as market abuse and conflict of interest, and the ranking of risk. | Concerning transparency, it is studying such factors as market abuse and conflict of interest, and the ranking of risk. |
| The committee is also looking at the longer-term potential risk and financial stability of private equity funds. | The committee is also looking at the longer-term potential risk and financial stability of private equity funds. |