Press centre

16 June 2009

Offshore investment company sector contributes over £300m a year to UK economy

AIC reponse to Foot Review

Responding to the Foot review of British offshore financial centres, the Association of Investment Companies (AIC) recommends that HM Treasury should support the continued operation of offshore financial centres which are the home to nearly a third (32%) of investment companies whose shares trade on UK markets. 

The growth of the closed ended investment company sector has been almost entirely offshore over the last five years, with the offshore sector raising £16.5bn compared to £2bn onshore.  This represents a vote of confidence in the regulatory and professional standards of the offshore centres, such as the Channel Islands.  Moreover, the AIC estimates that over £300 million is paid to the UK in management fees each year by Channel Islands domiciled investment companies, illustrating the very tangible, positive contribution the offshore investment company sector makes to the UK.

Taking into account fees paid to UK based investment banks and brokers related to IPOs, the AIC estimates an additional £400 million has been paid into the UK since 2001.

Daniel Godfrey, Director General, Association of Investment Companies (AIC) said: “The growth of the offshore investment company sector has been a real positive for the evolution of the industry as a whole, allowing the sector to adapt to meet demand for investment strategies which cannot be delivered tax efficiently in the UK.  But tax efficiency should not be confused with tax avoidance – far from it.  In fact returns received by UK investors in offshore funds are taxed in the usual way, involving no tax loss to HM Treasury.  The use of offshore jurisdictions simply means that investors are not taxed twice - once inside the fund and then again when they receive investment returns.  This outcome has long been supported by the Government where investors are using collective investment vehicles.

“The popularity of the offshore sector has also been a resounding vote of confidence in offshore centres, whilst the reciprocal benefits the offshore investment company sector provides for the UK makes a compelling case against protectionism. Without the offshore sector, the investment company sector as a whole would not have developed in the way it has.  The direct consequence of this would have been reduced choice and competition for investors and a lower volume of financial services activity in the UK, with lower potential tax revenues and employment opportunities.”

- Ends -

Notes to Editors
1. The Association of Investment Companies was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment. Today, the AIC represents a broad range of closed ended investment companies which are traded on the London Stock Exchange, AIM and Euronext; incorporating investment trusts and other closed ended investment companies and VCTs.  The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help Members add value for shareholders over the longer term. The AIC has 345 members and the industry has total assets of approximately £76 billion.

Back to top

Back to Press centre