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HMRC internal manual

Offshore Funds Manual

From
HM Revenue & Customs
Updated
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Particular arrangements: property investment vehicles

The same considerations apply in determining whether a property investment vehicle comes within the definition of an offshore fund as apply to any other sort of arrangements.

So, closed-ended arrangements that do not have a limited life will not come within the definition as they would not satisfy condition C at TIOPA2010/S356(5). This would be the case for overseas arrangements that are equivalent to a UK Real Estate Investment Trust (‘UK-REIT’), for example, but not to arrangements that are equivalent to a UK Property Authorised Investment Fund (‘PAIF’) which, like other UK authorised investment funds, are open-ended.

As is the case for other fund types, HMRC cannot provide a comprehensive list of different types of overseas property funds that come within the definition of an offshore fund. The reference to UK-REITs and PAIFs above is solely for the purpose of illustrating the distinction between types of funds that would or would not come within the definition of an offshore fund for tax purposes.

The particular terms relating to any arrangements have to be considered in each case. So, for example, any overseas property fund that is listed and only tradable on a secondary market but whose price closely tracks NAV because market makers are able to create and redeem units would, like any ETF, satisfy Condition C.