Michael Hintze’s newly launched hedge fund, Deltroit Asset Management, could face exposure to historical tax liabilities linked to his former firm, CQS, as a closely watched UK Supreme Court case approaches, according to a report by Bloomberg.
The report cite regulatory filings as showing that Deltroit has agreed to help cover any tax liabilities arising at CQS between 2016 and its sale to Manulife Investment Management in 2024. The arrangement relates to the UK’s “salaried member” legislation, which determines whether partners in a UK limited liability partnership should be taxed as employees rather than partners – a distinction that can result in significantly higher tax bills. This has implications for a large number of the UK’s professional services companies.
Hintze had already committed to covering any such liabilities when CQS was sold, with Deltroit later agreeing to mirror those obligations in a so-called back-to-back arrangement. The size of the potential liability has not been disclosed.
The disclosure comes ahead of a Supreme Court hearing next month in a separate but influential case involving rival hedge fund BlueCrest. That ruling is expected to help define the boundaries of the salaried members rules which apply to all UK limited liability partnerships (LLPs).
CQS first revealed it was under tax investigation in 2021 and has previously defended its position. Representatives for CQS, Deltroit and HMRC declined to comment.
Hintze quietly launched Deltroit in 2024, marking his return to fund management after stepping back from CQS. The firm is named after Deltroit Station, a large agricultural estate he owns in Australia. CQS’s flagship Directional Opportunities fund — which was excluded from the Manulife transaction — has since been rebranded as the Deltroit Directional Opportunities Fund and had recovered prior losses by mid-2024.
The Supreme Court case centres on BlueCrest’s appeal against an earlier ruling on the tax treatment of its senior traders, who the firm argues exercised “significant influence” over the business. HMRC’s inquiry into CQS is continuing, though the tax authority has taken legal steps to prevent the investigation from becoming time-barred.
Hintze founded CQS in 1999 after stints at Salomon Brothers and Goldman Sachs, building the firm into a multi-strategy hedge fund managing close to $20bn at its peak. Several senior CQS alumni, including Imran Hasnain, Alex Torrance and Simon Buckingham, are now partners at London-based Deltroit.
