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HMRC internal manual

Offshore Funds Manual

HM Revenue & Customs
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Transitional rules: introduction - Schedule 1 para (2)

The definition of an offshore fund at section S355 TIOPA 2010 applies to interests acquired on or after 1 December 2009 and replaces previous definitions. The 2010 definition is supplemented by the Offshore Funds (Tax) Regulations 2009 which contain the operational rules, whereas the operational rules relating to the previous definition were contained within Chapter 5 of Part 17 and Schedules 27 & 28 of ICTA (now repealed).

The regulations contain a number of consequential amendments to parts of the Tax Acts that made reference to the legislation within ICTA - these can be found at regulations 125 to 131.

Schedule 1 to the regulations contains transitional provisions. These are explained over the following pages.

In addition to the transitional rules, which as the name suggests only address situations that may occur during the transition period, there are further provisions within the offshore funds regulations that address particular situations that may arise going forward, as follows -

  • Regulation 30: rights in certain existing holdings (as at 1 December 2009, i.e. ‘grandfathering provisions) - see OFM16550;
  • Regulation 43: special rules for certain existing holdings (identification rules on disposal where investor has some rights in an offshore fund that are grandfathered and some that are not) - see OFM17600;
  • Regulation 48: conversion of non-reporting fund to reporting fund (deemed disposal election by investors) - see OFM19000;

Regulation 100: deemed disposals of interests (election by investors where a reporting fund becomes a non-reporting fund) - see OFM27700.