The Offshore Funds (Tax) (Amendment No. 2) Regulations 2013

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001, “the principal Regulations”) which make provision for the tax treatment of participants in offshore funds and make other miscellaneous amendments.

Regulation 1 deals with citation, commencement and effect. Provision is made to allow a manager of an offshore fund to elect that the amendments made by regulations 3 to 8 and 12 should not apply in relation to a reporting period of the fund which has ended before the Regulations come into force.

Regulation 2 introduces the amendments to the principal Regulations.

Regulations 3 to 5 make consequential amendments.

Regulation 6 inserts regulations 72A, 72B and 72C which provide how the reportable income of a fund for a reporting period is to be calculated in the case of funds which do not operate equalisation arrangements.

Regulation 7 amends regulation 92 in relation to the information to be provided in the report to participants in respect of the amount of any excess treated as additional distributions made to participants in the fund and makes provision as to how those amounts to be reported are to be determined.

Regulation 8 makes consequential amendments omitting regulations 92A, 92B and 92C. Equivalent provision is now made in regulations 72A, 72B and 72C.

Regulation 9 amends regulation 94A to reverse the order in which equalisation amounts reduce actual distributions and amounts treated as additional distributions.

Regulation 10 makes a consequential amendment to regulation 99.

Regulation 11 makes a minor amendment for clarification to regulation 106 (reporting requirements).

Regulation 12 makes a consequential amendment to the index of defined expressions.

Regulations 13 to 15 make miscellaneous minor amendments relating to offshore funds. Regulations 13 and 14 update the reference to “material interest” to “an interest” which is now the appropriate term and up-date cross-references to other statutory provisions. Regulation 15 makes a minor amendment for clarification to the Offshore Funds (Tax) (Amendment) Regulations 2011 (S.I. 2001/1211).

A Tax Information and Impact Note covering this instrument was published on 20 March 2013 alongside Budget 2013 and can be found on the HMRC website at http://www.hmrc.gov.uk/budget2013/tiins.htm#2. It remains an accurate summary of the impacts that apply to this instrument.