Liquidation Of Perpetual Offshore Funds Could Prove Expensive For Investors

Carla Johnson, InvestorsOffshore.com

03 April 2001

As a result of the merger between investment management companies Perpetual and Invesco, five of Perpetual's offshore funds are set to be liquidated but because offshore funds are vehicles used by investors to divert their money out of the country in order to defer their tax payments this means that investors who have sunk their cash into Perpetual's offshore funds could be faced with hefty tax bills.

Issues surrounding the liquidation of the funds will be raised at the funds' general meeting this month at which time it is expected that the unit holders will approve liquidation and investors will have no choice but to repatriate their money in May rather than at their own pace.

Nick Conyers, director at finanical adivsory firm Pearson Jones, represents three clients who have invested in the funds. He told the Financial Times: 'My clients went into the funds three years ago with the aim of deferring tax for a few years. They are higher-rate taxpayers, and if the fund is closed this year they will all be in a position to be taxed at 40 per cent on their investment. It is not so bad for basic rate taxpayers or perople with expat status, but it is still a charge that would not have applied.'

However, according to Invesco there may be a chance that investors could switch to another offshore fund but it would incur slightly higher risks albeit with a good performance. Richard Thompson, managing director of offshore sales at Invesco International, said the issue is currently being discussed by the two companies, explaining: 'We are very sensitive to the taxable event issue and we will be making an announcement next week.'

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