05/10/2011 Author: Tony Griffiths

Jupiter prepares for Fatca with new hire

London-based investment giant Jupiter Asset Management, which counts about $0.75bn in hedge fund and alternative Ucits assets among its $24.8bn total AuM, has brought in a full-time member of staff dedicated to ensuring the firm is compliant with the US’s Foreign Account Tax Compliance Act (Fatca) legislation, HFMWeek can reveal.    

Consultant Giray Takar arrived at Jupiter in mid-September on an 18-month contract. According to sources with knowledge of the role, Takar is in the initial stages of building a Fatca-focused team. His last contract was with Schroders. He was a project manager at Jupiter between 2002 and 2006.     

Enacted by the US in March 2010, Fatca was created to prevent US taxpayers from avoiding US tax on their income by investing through foreign financial institutions (FFI).  

Fatca has created a large compliance burden for hedge and retail fund managers around the globe, who have until 30 June 2013 to demonstrate that they have established whether their investors have US tax obligations.

While retail investors are more numerous, institutional investors are considered more likely to create Fatca-related complications in regards to look-through issues. “With institutions, which hedge funds increasingly count as their clients, the real problem is working out what the institution is, and how many layers it has,” explained one tax expert. “It’s much more ambiguous.”

According to Damon Ambrosini, a director in Deloitte’s US corporate tax services division, most hedge fund managers are still in the education stage and formulating their own thoughts.  

“There are substantial differences in fund managers such as in private equity, many of which have detailed customer databases,” he said. “On the securities side it’s primarily been about education – explaining the legal obligations surrounding outsourcing of Fatca compliance, for example.”

Compliance was originally slated for 1 January 2013. A timetable released in July now requires managers to demonstrate compliance between this date and 30 June 2013, with withholding payments to be phased in from 1 January 2014.   

“The reaction from the last released set of guidance seemed to be misinterpreted,” Ambrosini added.  “Many saw the guidance as a delay of Fatca. It’s not – the more detailed timetable is proof that the regulators are serious about implementation.”