The Offshore Funds (Tax) Regulations 2009

Charge to tax on disposal of asset U.K.

The charge to tax U.K.

17.—(1) There is a charge to tax if—

(a) a person disposes of an asset,

(b) either condition A or condition B is met, and

(c) as a result of the disposal, an offshore income gain arises to the person making the disposal.

(2) Condition A is that the asset is an interest in a non-reporting fund at the time of the disposal.

(3) Condition B is that—

(a) the asset is an interest in a reporting fund at the time of the disposal,

(b) the reporting fund was previously a non-reporting fund (becoming a reporting fund as the result of an application under regulation 52),

(c) the interest was an interest in a non-reporting fund during some or all of the material period,

(d) an election under regulation 48 was not prevented by paragraph (5) of that regulation, and

(e) no election has been made under regulation 48(2).

[F1 (3A) Where the asset is an interest in a reporting fund acquired in consequence of an arrangement to which section 135 (exchange of securities for those in another company treated as not involving a disposal) or section 136 (scheme of reconstruction involving issue of securities treated as exchange not involving a disposal) of TCGA 1992 applied, the reporting fund referred to in sub-paragraph (b) of condition B is the fund that was company A for the purposes of either of those sections and the interest referred to in sub-paragraph (c) of condition B is the interest in that fund.]

(4) For the purposes of paragraph (3)(c) the “material period” means a period beginning with the day on which consideration was given for the acquisition of the asset or on 1st January 1984 (whichever is the later) and ending with the day on which the fund became a reporting fund.

[F2 (4A) For the purposes of paragraph (4), where the asset was acquired on the vesting of variable remuneration represented by profit allocated under section 863I of ITTOIA 2005 (allocation of profit to the AIFM firm), the date on which the variable remuneration was awarded is treated as the date on which consideration was given for the acquisition of the asset.

(4B) Terms used in paragraph (4A) which are also used in section 863I of ITTOIA 2005 have the same meaning as in that section.]

(5) Chapter 5 of this Part deals with offshore income gains and the computation of offshore income gains.

Textual Amendments

F1 Reg. 17(3A) inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Offshore Funds (Tax) (Amendment) Regulations 2013 (S.I. 2013/661), regs. 1(1), 2(2)

F2 Reg. 17(4A)(4B) inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Offshore Funds (Tax) (Amendment) Regulations 2014 (S.I. 2014/1931), regs. 1(1), 2(2)

Modifications etc. (not altering text)

C1 Reg. 17 excluded by The Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964), reg. 14ZD(4) (as inserted (1.10.2011) by S.I. 2011/2192, regs. 1(1), 4)

The charge to tax: further provisions U.K.

18.—(1) The offshore income gain arising is treated for all the purposes of the Tax Acts as income which arises at the time of the disposal to the person making the disposal (or treated as making the disposal).

(2) The tax is charged on the person making the disposal (or treated as making the disposal).

(3) In the case of a person chargeable to income tax, tax is charged under Chapter 8 of Part 5 of ITTOIA 2005 (miscellaneous income: income not otherwise charged) for the year of assessment in which the disposal is made, but sections 688(1) and 689 of ITTOIA 2005 M1 (income charged and person liable) do not apply.

(4) In the case of a person chargeable to corporation tax, tax is charged under Chapter 8 of Part 10 of CTA 2009 (miscellaneous income: income not otherwise charged) for the accounting period in which the disposal is made.

(5) Paragraph (1) is subject to—

(a) regulation 19 (income treated as arising under regulation 17: remittance basis);

(b) regulation 20(1) (offshore income gain arising to non-resident trustees not treated as income of settlor);

(c) regulation 20(5) (application to gains of non-resident settlements);

(d) regulation 24(6) (application of section 13 of TCGA 1992).

[F3 (6) Nothing in regulation 17 of these Regulations applies to—

(a) an authorised investment fund to which regulation 14ZB, 14ZD(1) or Part 6A of the Authorised Investment Fund (Tax) Regulations 2006 applies, F4 ...

(b) an investment trust company to which regulation 43 or 45 of the Investment Trust (Approved Company) (Tax) Regulations 2011 apply[F5 , or

(c) the trustees of an exempt unauthorised unit trust to which regulations 22 or 23 of the Unauthorised Unit Trusts (Tax) Regulations 2013 applies.]]

Textual Amendments

F3 Reg. 18(6) substituted (1.1.2012) by The Investment Trust (Approved Company) (Tax) Regulations 2011 (S.I. 2011/2999), regs. 1(1), 46 (with reg. 1(3))

F4 Word in reg. 18(6)(a) omitted (6.4.2014) by virtue of The Unauthorised Unit Trusts (Tax) Regulations 2013 (S.I. 2013/2819), regs. 1(3), 43(a) (with reg. 32)

F5 Reg. 18(6)(c) and preceding word inserted (6.4.2014) by The Unauthorised Unit Trusts (Tax) Regulations 2013 (S.I. 2013/2819), regs. 1(3), 43(b) (with reg. 32)

Marginal Citations

M1 Section 688(1) was amended by paragraph 22 of Schedule 12 to the Finance Act 2008.

Income treated as arising under regulation 17: remittance basis U.K.

19.—(1) This regulation applies to income treated as arising under regulation 17 to an individual in a tax year if—

(a) section 809B, 809D or 809E of ITA 2007 M2 (remittance basis) applies to the individual for that year, and

(b) the individual is not domiciled in the United Kingdom in that year.

(2) The income is treated as relevant foreign income of the individual.

(3) For the purposes of Chapter A1 of Part 14 of ITA 2007 M3 (remittance basis)—

(a) any consideration obtained on the disposal of the asset is treated as deriving from the income, and

(b) unless the consideration so obtained is of an amount equal to or exceeding the market value of the asset, the asset is treated as deriving from the income.

(4) In paragraph (3)—

(a) “the asset” means the asset the disposal of which causes the income to be treated as arising, and

(b) “the disposal” means the disposal mentioned in sub-paragraph (a) of that paragraph.

(5) This regulation does not apply for the purposes of regulation 20.

Marginal Citations

M2 Sections 809B to 809E were inserted by paragraph 1 of Schedule 7 to the Finance Act 2008 (c. 9).

M3 Chapter A1 of Part 14 of the Income Tax Act 2007 (c. 3), consisting of sections 809A to 809Z7 of that Act, was inserted by paragraph 1 of Schedule 7 to the Finance Act 2008 (c. 9).