IFM17350 - Specific provisions relating to feeder funds

Feeder funds (Regulation 9A(8) of SI 2006/964 and Regulation 75(5) SI 2009/3001)

This provision allows HMRC to take into account the intended categories of investors in a feeder fund in establishing whether the GDO condition is met. This provision is limited to circumstances where the feeder fund is an offshore fund, an open-ended investment company or an authorised unit trust (or unauthorised unit trust in the case of Regulation 9A(8)) and has the same manager as the main fund (although regulation 75(5) is also incorporated into a range of other tax regimes, including the QAHC regime (IFM40000+), NRCG rules (CG73995P+) and REIT rules (IFM21000+)).

For example, a fund could satisfy the GDO condition where the only beneficial investor was an authorised unit trust scheme (i.e. a feeder fund), provided that the fund and the feeder fund together satisfy the GDO condition and the two entities have the same manager.

If a fund meets the GDO condition without needing to rely on a feeder fund then there is no need for it also to demonstrate that any feeder fund(s) meet the condition.

CoACS feeder funds (paragraph 15(8) of FA03/Sch7A)

This provision allows HMRC to take into account the intended categories of investors in a feeder fund to a CoACS in establishing whether the GDO condition is met for the purposes of SDLT seeding relief.

In this context, a feeder fund means an offshore fund, an open-ended investment company or a unit trust which is managed by the same person as the CoACS and where one of its main investment objects is investing in the CoACS.

See IFM17360 in respect of structures involving feeder funds more generally.