IFM12721 - Offshore Funds: Reporting funds: breaches of reporting fund conditions: types of breaches: introduction

Regulation 108 of SI 2009/3001

The regulations define two types of breaches - ‘minor’ breaches and ‘serious’ breaches.

The two types of breaches are discussed in more detail in the following pages. In summary -

• a ‘breach’ is, specifically, a breach of part of the requirements of a fund and / or its manager as set out in the regulations;
• a breach will either be a ‘minor’ or ‘serious’ breach;
• where a breach that is not a serious breach is discovered by the fund itself and rectified without HMRC having discovered the breach as a result of an informal request or a notice for information to be provided (see IFM12636) then it will not be considered to be a breach;
• minor breaches (IFM12725), provided there is a reasonable excuse or where they are inadvertent and remedied as soon as reasonably possible, will not affect a fund’s reporting fund status unless there is a specified number of such minor breaches within a certain period.
• Funds will only be excluded from the reporting fund regime for serious breaches (IFM12726), which includes a specified number of minor breaches within a certain period.
• There is an appeal process when a fund is excluded from the reporting fund regime by way of an ‘exclusion notice’ issued by HMRC - (see IFM12736).