IFM12546 - Offshore Funds: Reporting funds: computation of reportable income: equalisation: informing HMRC of equalisation method

The Regulations require a reporting fund to provide the following information in respect of equalisation (regulation 53):

• a statement of whether or not the fund intends to operate equalisation arrangements (regulation 53(1)(h))
• where a fund does intend to operate equalisation arrangements, a statement of whether or not the fund intends to operate full equalisation arrangements (regulation 53(1)(i)) – see IFM13430).
• where a fund does not intend to operate equalisation arrangements, a statement of whether or not the fund intends to make income adjustments in a reporting period (regulation 53(1)(j))
• where a fund intends to make income adjustments in a reporting period, a statement specifying (under regulation 53(1)(k)):
• whether it intends to make those adjustments based on reported income (see IFM13470) or on the basis of accounting income (see IFM13480).
• the length of the computation period.
• where a fund intends to make income adjustments in a reporting period based on accounting income (under regulation 53(1)(l)):
  • a statement by the fund manager specifying how the accounting income is to be determined.
  • a statement by the fund manager stating that it is reasonable to expect the difference between the amount of reported income per unit calculated using this method and the reported income per unit calculated on the basis of reported income to be 10% or less of the income calculated using the reported income method.
  • an undertaking by the manager to meet that obligation to inform HMRC if the difference is greater than 10% and, in these circumstances, to calculate the reported income per unit on the basis of reported income Regulation 53(1)(l)(iii).