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HMRC internal manual

Investment Funds Manual

Offshore Funds: investors in non-reporting funds: computation of offshore income gain: certain existing holdings

Regulation 43 of SI 2009/3001

An investor may hold rights in a fund which comes within the definition of an offshore fund at section S355 (1) TIOPA 2010 but which are subject to the grandfathering provisions in regulation 30 (see IFM13472).  This may be the case where, for example, the fund was either not an offshore fund under the previous definition at section 756A ICTA 1988, or it was an offshore fund under that definition but the investor did not hold a ‘material interest’ (as defined at section 759 ICTA, and which is a concept that no longer applies under the current rules).

Where this is the case, and an investor holding such grandfathered interests acquires further interests in the same fund which themselves are subject to the regulations, then, on making any subsequent disposals, it will be necessary to identify precisely which rights are being disposed of. In considering that, section 104 TCGA 1992 (share pooling: general interpretative provisions) applies as if the protected (i.e. grandfathered) rights were assets of a different class from the non-protected rights, and all of the protected rights must be treated as disposed of before any of the non-protected rights.