PART 2THE TREATMENT OF PARTICIPANTS IN NON-REPORTING FUNDS

CHAPTER 5OFFSHORE INCOME GAINS AND THE COMPUTATION OF OFFSHORE INCOME GAINS

Special rules for certain existing holdings43

1

This regulation applies if—

a

a person acquired rights (the “protected rights”) in an offshore fund—

i

before 1st December 2009, or

ii

in accordance with paragraph (2),

b

immediately before 1st December 2009 those rights did not constitute a material interest in an offshore fund within the meaning of that expression given by section 759 of ICTA M1, and

c

on or after 1st December 2009 the person acquires additional rights in the offshore fund (the “non-protected rights”).

2

Rights are acquired in accordance with this paragraph if—

a

the rights are acquired by the participant in accordance with a legally enforceable agreement in writing that was entered into by the participant before 30th April 2009,

b

in the case of an agreement which was conditional, the conditions are met before that date, and

c

the agreement is not varied on or after that date.

3

For the purposes of tax in respect of chargeable gains—

a

section 104 of TCGA 1992 M2 (share pooling: general interpretative provisions) applies as if the protected rights were assets of a different class from the non-protected rights, and

b

all the protected rights must be treated as disposed of before any of the non-protected rights may be so treated.