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HMRC internal manual

Offshore Funds Manual

Definition of an offshore fund: umbrella funds & protected cell companies - Section 363 TIOPA 2010

‘Umbrella arrangements’ means arrangements which provide for separate pooling of the contributions of investors and the profits or income out of which payments are made to them (S363(1) TIOPA2010). References to part of an umbrella arrangement are to the arrangements relating to a separate pool (or ‘sub-fund’). Umbrella arrangements will not themselves be treated as an offshore fund. Instead -

  • Each sub-fund and each class of interest is treated as an offshore fund in its own right,
  • The umbrella fund is not treated as an offshore fund,
  • The overall arrangements are disregarded.

The same approach applies to an individual cell of a protected cell company.

For umbrella arrangements and protected cell companies, it would usually follow that each sub-fund has the same residence status as the overall arrangement. In the case of a non-resident company it would be expected that each sub-fund would also be non-resident if it was under the “central management and control” of the directors of the company which constitutes the overall arrangement. In the case of a unit trust scheme, the trustees of the overall trust arrangements will usually also be the trustees of each separate arrangement, and so their residence status determines the residence of the fund, but where there are different trustees for each sub-fund then each must be considered separately. The “central management and control” test is also applicable to unit trusts.