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HMRC internal manual

Offshore Funds Manual

Reporting funds: preparation of accounts: changes of accounting practice - Regulation 61

Where a fund changes its accounting practice in drawing up a reporting fund’s accounts from one period of account to the next period of account, and the accounts for the later period are in accordance with a generally accepted accounting practice (‘GAAP’), then -

  • if the accounts for the later period are prepared in accordance with international accounting standards (‘IAS’), the offshore fund is only required to give notice of that to HMRC; but
  • if the accounts for the later period are not prepared in accordance with IAS then the fund must apply to HMRC for approval of that GAAP, unless the GAAP in question has been approved by HMRC and included in a list on the HMRC web pages maintained by the Collective Investment Schemes Centre (‘CISC’) (see OFM23100 for further details). The application must be accompanied by a statement specifying the entries in the fund’s accounts that are considered to equate to “total comprehensive income for the period” as that expression is used in IAS.

HMRC must give notice to the offshore fund either accepting or rejecting the application within 28 days beginning with the day on which HMRC receive such an application.

Appeals against HMRC rejection of application

If HMRC reject an application, the fund can appeal by giving notice of appeal to HMRC within a period of 42 days beginning with the day on which the notice rejecting the application was given.

Appeals will be heard by the First-tier Tribunal (or the Upper Tribunal if so determined by Tribunal procedure rules) who may either uphold or quash the rejection of the application.

Failure to apply for approval of GAAP not in accordance with IAS

Failure to make an application where required to do so by regulation 61 would be considered to be a ‘serious’ breach and would result in the fund ceasing to be a reporting fund (regulation 113(3) - see OFM29260).