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HMRC internal manual

Offshore Funds Manual

The 2009 offshore funds regime: introduction: classification of funds

In order to determine how an investment, made by a UK investor, in any particular overseas arrangement will be treated for tax purposes, it is first necessary to determine whether the arrangement comes within the definition of an ‘offshore fund’ as set out at section 355 (1) TIOPA 2010 - see OFM03000 onwards.

UK investors should be able to get this information from their adviser or directly from the fund itself. It is the investor’s responsibility to ensure that they know whether they hold an investment in an offshore fund, as defined at section 355(1).

Once the UK investor has determined that a particular arrangement is an offshore fund, they will need to determine whether it is a non-reporting fund or a reporting fund. A fund will be a non-reporting fund unless Part 3 of the Offshore Funds (Tax) Regulations 2009 applies, for a period of account. There is a list of funds that come within the definition of an offshore fund and have successfully applied for reporting fund status on HMRC’s website. The list is updated on a monthly basis.

The regulations set out the detailed rules relating to reporting funds, and to the taxation of UK investors in reporting and non-reporting funds.