Total abolition of stamp duty is the best option open if the UK is to stem the flow of funds offshore, according to the Investment Management Association. A new report, compiled by the IMA and international business services provider KPMG, estimates that the UK loses nearly £900,000 ($1.77 million) a year for every £1 billion of funds domiciled offshore instead of the UK. European industry data, it said, also indicates that the UK funds industry has lagged behind Dublin and Luxembourg over the last 10 years, with the UK's tax regime being identified as a factor. The report, which came in response to a UK Treasury and Revenue's Discussion Paper on simplifying the Schedule 19 Stamp Duty Reserve Tax regime, said that if a further £80 billion of funds – or 17 per cent of current UK total funds under management – were to move offshore, the loss to the Exchequer would be the equivalent of the entire current Schedule 19 tax take. "The Schedule 19 SDRT regime is costly and increasingly unsustainable. The discussion paper suggests that abolition is not a viable option because it would result in the loss of £70 million a year to the Exchequer," Julie Patterson, director of Authorised Funds and Tax at the IMA said in a statement. "However, the findings of the IMA and KPMG report demonstrate that abolition, as part of a package of reforms, could quickly offset the lost SDRT revenue through the benefit in other tax revenue if funds stayed in the UK." The government discussion paper offers two options for simplification. While the IMA welcomes that the government is open to reform, it says both options proposed have administrative and marketing downsides. It continues to believe that abolition is the only sensible outcome. The UK has already seen a large outflow of funds, said the IMA, and while it is unlikely that funds will return in significant numbers in the short term, it is ever more crucial to halt the exodus. The IMA is the trade body for the UK's £3,100 billion asset management industry.