Part 8Offshore funds
Tax treatment of participants in offshore funds
356Meaning of “mutual fund”
1
In section 355 “mutual fund” means arrangements with respect to property of any description (including money) that meet conditions A, B and C.
2
Subsection (1) is subject—
a
to the exceptions made by or under sections 357 and 359, and
b
to sections 360 and 361.
3
Condition A is that the purpose or effect of the arrangements is to enable the participants—
a
to participate in the acquisition, holding, management or disposal of the property, or
b
to receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income.
4
Condition B is that the participants do not have day-to-day control of the management of the property.
5
For the purposes of condition B a participant does not have day-to-day control of the management of property by virtue of having a right to be consulted or to give directions.
6
Condition C 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 calculated entirely, or almost entirely, by reference to—
a
the net asset value of the property that is the subject of the arrangements, or
b
an index of any description.
7
The Treasury may by regulations amend condition C.
8
Regulations under subsection (7) may only be made if a draft of the statutory instrument containing the regulations has been laid before and approved by a resolution of the House of Commons.