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HMRC internal manual

Offshore Funds Manual

Investors in non-reporting funds: introduction


A non-reporting fund is any offshore fund that does not have reporting fund status for a particular period of account. It is possible that a fund may previously have been a reporting fund and subsequently became a non-reporting fund, or vice versa.

Whilst a reporting fund has certain obligations to HMRC and to its investors, a non-reporting fund by contrast has no such obligations for UK tax purposes, but it will still of course have to meet its normal obligations to its investors, and UK investors are responsible for ensuring that they make correct returns of any income or gains received from their investment.

Offshore income gains (‘OIGs’)

The main effect for UK investors invested in non-reporting funds, as opposed to reporting funds, is that on disposal of their interests they will be liable to tax on income on any gains arising (that is, an offshore income gain, or ‘OIG’). There are certain exceptions to this - see OFM16000 onwards.

For guidance as to what happens when a reporting fund becomes a non-reporting fund, and vice versa, see OFM27700 onwards and OFM19000 onwards.

Guidance for investors in non-reporting offshore funds

Part 2 of the Offshore Funds (Tax) Regulations 2009 is solely concerned with the treatment of ‘participants’ (that is, UK investors) in non-reporting funds and the following pages explain the effect of the regulations.