Offshore Funds: Participants in transparent offshore funds: amounts derived from capital
Sections 22 and 103D Taxation of Chargeable Gains Act 1992 (TCGA)
If an investor within charge to UK tax disposes of an interest in a transparent offshore fund the gain is calculated in accordance with section 103D TCGA. The rules are similar to the rules for disposals of interests in co-ownership authorised contractual schemes (ACS) – see the ACS guidance for more information.
If an offshore fund pays an amount to an investor which is not a distribution of income or a return of equalisation, but is a capital sum derived from the assets held by the ACS then there is a disposal for the purposes of chargeable gains under section 22 TCGA. Under section 103D(7)(b) any future chargeable gains calculation takes account of the any amount already liable to tax under section 22.