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HMRC internal manual

Offshore Funds Manual

HM Revenue & Customs
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Transitional rules: applications for distributing fund status for overlap period - Schedule 1 paras (3) and (6)

Paragraph (3) of Schedule 1 contains transitional provisions that allow existing funds (or any other person within Paragraph 18(1) of Schedule 27 to ICTA), should they wish to do so, to -

  • apply in writing to HMRC for distributing fund status for the period of account that ‘straddles’ the 1 December 2009 (called ‘the overlap’ period in paragraph (3)) or any earlier period of account, and
  • if a successful application has been made for the overlap period, to also apply to continue to be treated as a distributing fund for the succeeding period.

but only in respect of periods ending on or before 31 May 2012 (paragraph 3B).

If a fund makes a successful application for distributing fund status for the overlap period or for the overlap and the succeeding period and then immediately becomes a reporting fund for the subsequent period of account, it will be treated as if it had been a reporting fund from the first day that it actually became a distributing fund to the period ending on the last day of the overlap or succeeding periods for which it obtained distributing fund status - provided, of course, it was in fact a distributing fund continuously during that time (paragraph (6) Schedule 1).

In order to allow an application for distributing fund status for the overlap period the ‘old’ offshore funds legislation temporarily continues to be effective for this purpose (Paragraph 3(4)). The application for distributing fund status for this period (and for the succeeding period, if desired and if permitted by paragraph 3(3) or 3(3A)) is therefore made under the ‘old’ legislation in Chapter 5 of Part 17 Income and Corporation Taxes Act 1988.

An application cannot be made for distributing fund status in respect of a period for which the fund has successfully applied for reporting fund status (paragraph 3(3ZA)).