Understanding the tax disclosure in a fund Private Placement Memorandum (PPM)
Produced in partnership with Ceinwen Rees of Macfarlanes LLP
Understanding the tax disclosure in a fund Private Placement Memorandum (PPM)

The following Tax guidance note Produced in partnership with Ceinwen Rees of Macfarlanes LLP provides comprehensive and up to date legal information covering:

  • Understanding the tax disclosure in a fund Private Placement Memorandum (PPM)

To seek out investors, a private equity fund will use a private placement memorandum (PPM) as its main marketing document. The content of a PPM is largely governed by regulatory law. For a tax lawyer, the PPM is a useful source of information as it will generally contain details about the fund’s investment strategy and structure. When acting for a potential investor, the PPM may be the easiest place to find out the information necessary to review the tax risks associated with making an investment.

Any tax practitioner asked to review a PPM for an investor or asked to help prepare a PPM for a sponsor should review the entire agreement rather than looking at just the ‘tax sections’. More time, however, will usually be spent reviewing the ‘tax sections’, which are the tax-related risk factors and the tax disclosure.

This Table looks at the common UK tax information that you would expect to find in the tax disclosure of a PPM produced by a typical UK private equity fund (for more, see Practice Note: Taxation of private equity funds—how is a fund structured?). The information would also feature in a PPM for an offshore fund that has some UK nexus (for example, UK investors) (for more, see Practice Note: Taxation of international private equity funds—offshore fund structuring).

The tax disclosure aims to address