Part 8Offshore funds
Tax treatment of participants in offshore funds
357Exceptions to definition of “mutual fund”
1
Arrangements are not a mutual fund for the purposes of section 355 if—
a
condition D is met, and
b
condition E or F is met.
2
Condition D is that, under the terms of the arrangements, a reasonable investor participating in the arrangements would expect to be able to realise all or part of an investment in the arrangements on a basis mentioned in section 356(6) only in the event of the winding up, dissolution or termination of the arrangements.
3
Condition E is that the arrangements are not designed to wind up, dissolve or terminate on a date stated in or determinable under the arrangements.
4
Condition F is that—
a
the arrangements are designed to wind up, dissolve or terminate on a date stated in or determinable under the arrangements,
b
subsection (5), (6) or (7) applies, and
c
the arrangements are not designed to produce a return for participants that equates, in substance, to the return on an investment of money at interest.
5
This subsection applies if none of the assets that are the subject of the arrangements is a relevant income-producing asset (see section 358).
6
This subsection applies if, under the terms of the arrangements, the participants in the arrangements are not entitled to the income from the assets that are the subject of the arrangements or any benefit arising from such income.
7
This subsection applies if—
a
under the terms of the arrangements, after deductions for reasonable expenses, any income produced by the assets that are the subject of the arrangements is required to be paid or credited to the participants, and
b
a participant who is an individual resident in the United Kingdom would be charged to income tax on the amounts paid or credited.
8
For the purposes of this section the fact that arrangements provide for a vote or other action that may lead to the winding up, dissolution or termination of the arrangements does not, by itself, mean that the arrangements are designed to wind up, dissolve or terminate on a date stated in or determinable under the arrangements.