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HMRC internal manual

Offshore Funds Manual

HM Revenue & Customs
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Investors in non-reporting funds: computation of offshore income gains: certain existing holdings - Regulation 43

An investor may hold rights in a fund which comes within the definition of an offshore fund at section S355 (1) TIOPA 2010 but which are subject to the grandfathering provisions in regulation 30 (see OFM16550) because, for example, the fund was either not an offshore fund under the previous definition at section 756A ICTA 1988 or it was but the investor did not hold a ‘material interest’ (as defined at section 759 ICTA, and which is a concept that no longer applies under the 2009 regime).

Where this is the case and an investor holding such grandfathered interests acquires further interests in the same fund which themselves are subject to the regulations, then, on making any subsequent disposals, it will be necessary to identify precisely which rights are being disposed of. In considering that, section 104 TCGA 1992 (share pooling: general interpretative provisions) applies as if the protected (i.e. grandfathered) rights were assets of a different class from the non-protected rights, and all of the protected rights must be treated as disposed of before any of the non-protected rights.