IFM13374 - Offshore Funds: participants in offshore funds: participants within the charge to income tax: disposals: tax transparent reporting funds

Where regulation 29 of SI 2009/3001 applies to an offshore fund, any gain on the disposal of an interest in the fund will not be an offshore income gain. Such an offshore fund may nevertheless choose to apply for reporting fund status. Such an application may be made if the fund intends to exceed the percentage limit for investment in other non-reporting funds, or does not wish to monitor that limit or considers that being approved as a reporting fund will be beneficial in attracting UK investors.

These funds are transparent for income purposes only and remain opaque for capital gains purposes. So, the capital gains charge will only arise to a UK investor on the disposal (deemed or actual) or part-disposal by the investor of their investment in the fund and not on the disposal by the fund of any of its underlying assets.