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HMRC internal manual

Investment Funds Manual

Offshore Funds: Reporting funds: breaches of reporting fund conditions: introduction

Entry into the reporting funds regime (see IFM12420) is subject to a number of conditions and obligations on the part of funds. The regime is designed to provide a level of certainty to funds, for example by allowing them to apply for reporting fund status in advance of preparing their first accounts, or indeed in advance of the fund actually being formally set up.

For the reporting fund regime to work as intended it is important that funds admitted into the regime meet the obligations placed on them by the Regulations (SI 2009/3001), and as funds will not otherwise be within the jurisdiction of HMRC, there are sanctions available to HMRC to address any breaches.

Reporting funds should be able to meet their obligations, but where there is a failure to do so and a breach of the reporting fund requirements occurs then the intention is that any response should be reasonable and proportionate. Breaches are therefore classed as ‘minor’ or ‘serious’.  Where a fund commits a serious breach of the requirements of the Regulations, or a combination of minor breaches within a certain period, the fund may be excluded from the reporting fund regime. The following pages provide more information on ‘minor’ and ‘serious’ breaches, and how they are treated.