The Offshore Funds Regulations 2004

Modification of Schedule 27 to ICTA 1988

4.—(1) Schedule 27 to ICTA 1988 (distributing funds) applies to—

(a) a part of a fund which is regarded as a separate offshore fund by virtue of section 756B(2) of that Act, and

(b) a class of interest, within a main fund, which is regarded as a separate offshore fund by virtue of section 756C(1) of that Act,

subject to the following modifications.

(2) In paragraph 1 (requirements as to distributions)—

(a) after sub-paragraph (2) add—

“(2A) In the case of a class of interest which is regarded as a separate offshore fund the reference in sub-paragraph (2)(b) to the amount of the gross income shall be a reference to the amount of the gross income of the main fund (as defined in section 756C(1)).”;

(b) after sub-paragraph (3) add—

“(3A) In the case of a part of a fund or a class of interest which is regarded as a separate offshore fund, the accounts referred to in sub-paragraph (3) shall be the accounts of the umbrella fund or the main fund, of which the part of the fund, or the class of interest forms part.”; and

(c) after sub-paragraph (6) add—

“(7) In sub-paragraph (6) references to—

(a) the offshore fund do not include—

(i) parts of an umbrella fund which are regarded as separate offshore funds by virtue of sections 756B(2); or

(ii) classes of interest which are regarded as separate offshore funds by virtue of section 756C(1); or

(b) the making of distributions, in relation to a part of an umbrella fund or to a class of interest in a main fund, are references to distributions made (as the case may be) by—

(i) the umbrella fund to persons having an interest in part of that fund which is regarded as a separate offshore fund by virtue of section 756B(2); and

(ii) the main fund to a person having an interest of that class which is regarded as a separate offshore fund by virtue of section 756C(1).”.

(3) In paragraph 2 (funds operating equalisation arrangements) after sub-paragraph (2) add—

“(2A) In this paragraph in the case of—

(a) an umbrella fund, part of which is regarded as a separate offshore fund by virtue of section 756B(2), or

(b) a main fund, a class of interest in which is regarded as a separate offshore fund by virtue of section 756C(1),

references to the equalisation arrangements or to the equalisation account of the offshore fund shall be construed respectively as references to the equalisation arrangements of, or to the equalisation account maintained by, the umbrella fund or the main fund in respect of the separate offshore fund in question.

(2B) In this paragraph references to making a distribution, in relation to a part of an umbrella fund or to a class of interest in a main fund, is a reference to a distribution made (as the case may be) by—

(a) the umbrella fund to persons having an interest in part of that fund which is regarded as a separate offshore fund by virtue of section 756B(2); and

(b) the main fund to a person having an interest of that class which is regarded as a separate offshore fund by virtue of section 756C(1).”.

(4) After paragraph 4(3) insert—

“(3A) For the purposes of sub-paragraph (3), in determining the relevant amount of expenditure attributable to—

(a) each part of a fund which is regarded as a separate offshore fund by virtue of section 756B(2), or

(b) each class of interest which is regarded as a separate offshore fund by virtue of section 756C(1),

any expenditure shall be apportioned in such manner as is just and reasonable.”.

(5) At the end of paragraph 5 (United Kingdom equivalent profits) add—

“(6) In sub-paragraph (5) references to the offshore fund do not include—

(a) a part of a fund, within an umbrella fund, where that part is regarded as a separate offshore fund by virtue of section 756B(2); or

(b) a class of interest, within a main fund which is regarded as a separate offshore fund by virtue of section 756C(1).

(7) For the purposes of sub-paragraph (5) if an offshore fund has within it—

(a) any part which is regarded as a separate offshore fund by virtue of section 756B(2); or

(b) any class of interest which is regarded as a separate offshore fund by virtue of section 756C(1),

the relevant amount of income attributable to each part, or each class of interest, within the fund, shall be apportioned between them in such manner as is just and reasonable.”.

(6) At the end of paragraph 11 (offshore funds with wholly-owned subsidiaries) add—

“(5) In sub-paragraphs (1) to (2) references to the offshore fund do not include a class of interest which is regarded as a separate offshore fund by virtue of section 756C(1).

(6) In the case of a class of interest, references to the offshore fund in sub-paragraphs (1), (2) and (4)(b) shall be to the main fund.

(7) For the purposes of sub-paragraph (4) if—

(a) there are parts of an umbrella fund which are regarded as separate offshore funds by virtue of section 756B(2); or

(b) there are classes of interest in a main fund which are regarded as separate offshore funds by virtue of section 756C(1),

the receipts and expenditure shall be apportioned in such manner as is just and reasonable.”.

(7) In paragraph 15 (application for certification) for sub-paragraph (1)(b) substitute—

“(b) the application is accompanied by—

(i) the accounts of the fund for, or for a period which includes, the account period to which the application relates; or

(ii) in the case of—

(aa) part of an umbrella fund, or

(bb) a class of interest in a main fund,

which is regarded as a separate offshore fund, the accounts of the umbrella fund or the main fund (as the case may be) for, or for a period which includes, the account period to which the application relates; and”.