CSH2: taxation and performance

aroominyork

OK, so you think Amundi and/or HMRC are saying 1+1=3, and from your and LateGenXer's analysis of the legislation that is a fair conclusion. So if you wrote to Amundi and got the same reply as LGX and I have received, how would you declare the income?

masonic

aroominyork said:

OK, so you think Amundi and/or HMRC are saying 1+1=3, and from your and LateGenXer's analysis of the legislation that is a fair conclusion. So if you wrote to Amundi and got the same reply as LGX and I have received, how doing you declare the income?

I don't think HMRC are saying 1+1=3. I tend to agree with LateGenXer that this would have flown under the radar prior to money flooding into MMF and earning lots of taxable income. In my experience HMRC are quick to point out when they think something is not right, but not very candid about giving tax advice. I note they closed their infamous forums, or we could have had some entertainment watching them fall over this issue, like they did with tax arising on multi-year fixed rate accounts. When they told certain investment platforms they couldn't ISA-wrap fractional shares, they were reportedly not very willing to enter into dialogue with the impacted firms, up until the government pledged to legislate the problem away. So I doubt they would have gone to each investment manager and formulated a recommendation to bring them into compliance. Likely they just made an announcement that what they considered income was being disguised as a capital gain in synthetic funds.

Perhaps there is something in the theory that Amundi is taking the derivative (valued at about 50% assets) and the collateral basked (valued at about 50% assets) to reach a determination that the bond part is less than 60%. But if that were correct, then the legislation doesn't do what it intends, and I think the intention of the legislation is clear, if not the effect.

Moving on to what would I do... I stated back in June 2024 that even when nil ERI was being reported by the fund, it was not something I'd want to hold unwrapped, a sentiment echoed later by GeoffTF. But a MMF fund that is reporting nil ERI is less problematic than a MMF reporting ERI as a dividend in my view so I would definitely not hold this fund unwrapped in the current situation. Had I been caught holding it at the end of the previous accounting period, I don't know what I'd do.

My only comparable situation (not very similar) is when Interactive Investor failed to deduct tax at source from my VCT trail commission rebates over a period of 6 years (there was no indication from them that they were making payments gross). In the end I just had to pay the tax (no interest or penalty), but I was successful in pursuing a complaint for an equal amount of compensation from II, given it was a mess of their making and one they handled badly.

aroominyork

I've written to Amundi a couple of times asking whether they will publish the level of ERI within six months of the reporting date, ie by the end of March 2026. This is important so I know the adjusted purchase price and how much, if any, CGT allowance I have available to use by 5 April. kpmgreportingfunds.co.uk shows, for the reporting date of 31/10/2024 (by Lyxor, the fund manager until earlier this year): "Date of publication on KPMG reportingfunds.co.uk: 19/08/2025." Radio silence from Amundi.