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HMRC internal manual

Inheritance Tax Manual

Liabilities: investigating liabilities: income tax on the disposal of an 'offshore fund'

Income tax on gains that accrue to investors in overseas funds which do not distribute a certain level of income may be charged under Chapter V Part XVII of the Income and Corporation Taxes Act 1988 (ICTA/88). Income tax may be chargeable on the whole or part of any gain realised from a disposal of an interest in an offshore fund. For example, a non-resident company or unit trust scheme or some other arrangement which creates, under foreign law, rights in the nature of co-ownership. ICTA88/S757 (3) treats death as a disposal so you may allow a deduction against the value of the death estate for any income tax liability that arises as a result, IHTA84/S174 (1) (a).