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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Authorised investment funds (AIFs): structure, arrangement and tax status of funds: treatment of manager's equalisation

Equalisation payments received by the manager will relate only to units that are or have been held in the manager’s box and as such will be a part of the manager’s trading receipts assessable under Case 1 of Schedule D.

This will be the case irrespective of whether they are received by the manager as dividends (which may be described as ‘intermediate holding income’) or are paid directly as reimbursements to the manager by the authorised investment funds (trustee or company).

However if units are held by the manager as investment units rather than dealing units (that is they are not held in the course of the manager’s trade) then the treatment will be different - see CTM48515 for details.