The Offshore Funds (Tax) Regulations 2009

JurisdictionUK Non-devolved
CitationSI 2009/3001

2009No. 3001

INCOME TAX

CORPORATION TAX

CAPITAL GAINS TAX

The Offshore Funds (Tax) Regulations 2009

12thNovember2009

1stDecember2009

CONTENTS

PART 1

INTRODUCTION

Preliminary provisions1. Citation, commencement and effect

2. Structure of these Regulations

General provisions3. Definition of "offshore fund"

4. Classification of offshore funds

Treatment of umbrella arrangements and of funds comprising more than one class of interest5. Treatment of umbrella arrangements

6. Treatment of funds comprising more than one class of interest

Interpretation7. Meaning of "participant"

8. Meaning of "interest" (of a participant in an offshore fund)

9. Meaning of "guaranteed return fund"

10. Meaning of "market value"

11. Meaning of "transparent fund"

12. General interpretation

Transitional provisions etc.13. Transitional provisions and savings, repeals, abbreviations and general index

PART 2

THE TREATMENT OF PARTICIPANTS IN NON-REPORTING FUNDS

CHAPTER 1

PRELIMINARY PROVISIONS

14. Structure of this Part

15. Meaning of "material disposal"

CHAPTER 2

CHARGES TO TAX ON PARTICIPANTS IN NON-REPORTING FUNDS

Charge to tax on certain amounts treated as distributions16. Treatment of certain amounts as distributions

Charge to tax on disposal of asset17. The charge to tax

18. The charge to tax: further provisions

19. Income treated as arising under regulation 17: remittance basis

Offshore funds and gains of non-resident settlements20. Application to gains of non-resident settlements

Offshore funds and the transfer of assets abroad21. Application of transfer of assets abroad provisions

Application of TCGA 199222. Application of certain provisions of TCGA 1992

23. Application of section 10A of TCGA 1992

24. Application of section 13 of TCGA 1992

CHAPTER 3

EXCEPTIONS ETC. FROM THE CHARGE TO TAX

25. Exceptions from the charge

26. Trading stock etc.

27. Long-term insurance funds of insurance companies

28. Loans other than participating loans

29. Interests in transparent funds

30. Rights in certain existing holdings

31. Charitable companies and charitable trusts

CHAPTER 4

DISPOSALS OF INTERESTS IN NON-REPORTING FUNDS

Basic provisions32. Application of this Chapter

33. Disposal of an asset: the basic rule

Further provisions34. Provisions applicable on death

35. Application of section 135 of TCGA 1992

36. Application of section 136 of TCGA 1992

37. Exchange of interests of different classes

CHAPTER 5

OFFSHORE INCOME GAINS AND THE COMPUTATION OF OFFSHORE INCOME GAINS

38. General provisions

39. The basic gain and its computation

40. Earlier disposal to which the no gain/no loss basis applies

41. Modifications of TCGA 1992

42. Losses

43. Special rules for certain existing holdings

CHAPTER 6

DEDUCTION OF OFFSHORE INCOME GAINS IN COMPUTING CHARGEABLE GAINS

44. Ambit of this Chapter

45. Treatment of the TCGA disposal: general rules

46. Modification of section 162 of TCGA 1992

47. Application of section 128 of TCGA 1992

CHAPTER 7

THE CONVERSION OF A NON-REPORTING FUND INTO A REPORTING FUND

48. Consequences of conversion for participants

PART 3

REPORTING FUNDS AND THE TREATMENT OF PARTICIPANTS IN REPORTING FUNDS

CHAPTER 1

PRELIMINARY PROVISIONS

49. Structure of this Part

50. Meaning of "reporting fund"

CHAPTER 2

ENTRY INTO THE REPORTING FUND REGIME

Applications for this Part to apply51. Who may make an application

52. Conversion of non-reporting fund into reporting fund

53. Contents of an application

54. Form, timing and withdrawal of application

Procedure on applications55. Response by HMRC to application

56. Appeal against rejection of application

CHAPTER 3

THE GENERAL DUTIES OF REPORTING FUNDS

57. Effects of entry into the reporting fund regime

58. General duties of reporting funds

CHAPTER 4

THE PREPARATION OF ACCOUNTS

59. Accounts to be prepared in accordance with acceptable accounting policy

60. Change in accounting policy

61. Change in accounting practice to a generally accepted accounting practice

CHAPTER 5

THE COMPUTATION OF REPORTABLE INCOME

General62. Duty to provide computation

63. Computation of reportable income: general

Adjustments for capital items64. Treatment of capital items following IMA SORP

65. Treatment of other capital items

Adjustments for special classes of income66. Effective interest income or comparable amounts

67. Income from wholly-owned subsidiaries

68. Income from other reporting funds

69. Income from non-reporting funds: first case

70. Income from non-reporting funds: second case

71. Income from non-reporting funds if first case ceases to apply

Adjustments for equalisation arrangements72. Treatment of reporting funds operating equalisation arrangements

CHAPTER 6

TRANSACTIONS BY CERTAIN REPORTING FUNDS WHICH ARE NOT TREATED AS TRADING

Conditions to be met by reporting funds for this Chapter to apply73. Introductory

74. The equivalence condition

75. The genuine diversity of ownership condition

76. The genuine diversity of ownership condition: further provisions

Clearances in relation to the equivalence and genuine diversity of ownership conditions77. Who may apply for clearance

78. Procedure for obtaining clearance

79. Circumstances in which clearance may not be relied upon

Investment transactions carried out by diversely owned funds80. Treatment of investment transactions carried out by diversely owned funds

81. Meaning of "investment transaction"

82. Meaning of "relevant contract": general

83. Meaning of "relevant contract": options

84. Meaning of "relevant contract": futures

85. Options and futures: further provisions

86. Meaning of "relevant contract": contracts for differences

87. Interpretation of regulation 81(c)

88. Meaning of "units in a collective investment scheme"

89. Meaning of "transaction in a carbon emission trading product"

CHAPTER 7

REPORTS TO PARTICIPANTS

90. Report to participants for a reporting period

91. Meaning of "reporting period"

92. Contents of report to participants

93. Lengthy periods of account where full information not available

CHAPTER 8

THE TAX TREATMENT OF PARTICIPANTS IN REPORTING FUNDS

Tax treatment of the reported income of the fund in the hands of participants94. Reported income: general provisions

95. Participants chargeable to income tax: corporate funds

96. Participants chargeable to income tax: other non-transparent funds

97. Participants chargeable to income tax: transparent funds

98. Participants chargeable to corporation tax

Disposals and deemed disposals of interests99. Disposals of interests

100. Deemed disposals of interests

Charitable companies and charitable trusts101. Special provisions applying to charitable companies and charitable trusts

Anti-avoidance provisions102. Treatment of financial traders if conditions specified in regulation 73 are met

103. Amounts brought into account in computing trading profits or losses of financial traders

104. Interests not within regulation 103

105. Meaning of "financial trader"

CHAPTER 9

THE PROVISION OF INFORMATION TO HMRC

106. Annual reporting requirements

107. Information obligations of reporting funds

CHAPTER 10

BREACHES OF REPORTING FUND REQUIREMENTS

108. Types of breaches

109. Consequences of minor breaches

110. Differences between reported income and reportable income

111. Provision of report that is incorrect or incomplete

112. Cases where information is not provided

113. Serious breaches

114. Consequences of serious breaches

115. Appeal against exclusion from the reporting fund regime

CHAPTER 11

LEAVING THE REPORTING FUND REGIME

116. Termination by notice given by reporting fund

117. Reporting fund not complying with requirements

CHAPTER 12

CONSTANT NAV FUNDS

Interpretation118. Meaning of "constant NAV fund"

Modified application of this Part119. General

120. Modified application of Chapter 2

121. Modified application of Chapter 3

122. Disapplication of Chapters 4 to 9

123. Modified application of Chapter 10

124. Disapplication of Chapter 11

PART 4

CONSEQUENTIAL AMENDMENTS

125. Amendment of the Inheritance Tax Act 1984

126. Amendment of ICTA

127. Amendment of TCGA 1992

128. Amendment of ITTOIA 2005

129. Amendment of ITA 2007

130. Amendment of FA 2008

131. Amendment of CTA 2009

SCHEDULE 1-

Transitional Provisions and Savings

SCHEDULE 2-

Repeals

SCHEDULE 3-

Abbreviations and Defined Expressions

PART 1-

Abbreviations of Acts

PART 2-

Index of expressions defined or otherwise explained in these Regulations

The Treasury make the following Regulations in exercise of the powers conferred by sections 41(1) and 42 of the Finance Act 2008 1.

In accordance with section 42A(2)(c) of that Act 2, a draft of this instrument was laid before the House of Commons and approved by a resolution of that House.

PART 1

INTRODUCTION

Preliminary provisions

Citation, commencement and effect

1.-

(1) These Regulations may be cited as the Offshore Funds (Tax) Regulations 2009 and shall come into force on 1st December 2009.

(2) These Regulations have effect-

(a) for the purposes of income tax-(i) for the tax year 2009-10 and subsequent tax years, and(ii) for distributions made on or after 1st December 2009;(b) for the purposes of corporation tax-(i) on income, for accounting periods ending on or after 1st December 2009 and for distributions made on or after that date, and(ii) on chargeable gains, in relation to disposals made on or after 1st December 2009; and(c) for the purposes of capital gains tax, in relation to disposals made on or after 1st December 2009.

(3) Paragraph (2) is subject to Schedule 1 to these Regulations (transitional provisions and savings).

Structure of these Regulations

2.The structure of these Regulations is as follows-

this Part contains introductory provisions;

Part 2 deals with the treatment of participants in non-reporting funds;

Part 3 deals with reporting funds and the treatment of participants in reporting funds;

Part 4 makes consequential amendments to primary legislation.

General provisions

Definition of "offshore fund"

3.-

(1) In these Regulations "offshore fund" has the meaning given...

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