HMRC has realised the change in law to amend the Value Added Taxes Act 1994 due to take effect from 1 October containing some new exemptions from VAT for the fund management industry was too wide. The changes exempt management of various open and closed ended collective investment schemes from VAT. See FReD This Week 11 July for a description of the reasons for the changes. However, as drafted, the new rules would have included management services within the definition of offshore funds benefiting from the exemption. This was not the intention and the revised definition of offshore funds (that will come into force on 1 October instead of the original version) exempts schemes or sub-funds of umbrella schemes which are recognised under FSMA. But it clarifies the exemption does not apply to schemes or sub-funds that are not currently being marketed in the UK if they have never been marketed in the UK or if less than 5% of their shares or units are held by, or on behalf of, investors who are in the UK.