HMRC is consulting on the definition of “offshore fund” in the Finance Act. It recognises that basing the definition on the FSMA definition of “collective investment scheme” undermines the effectiveness of tax rules. The new definition applies to mutual funds taking one of three forms that meet the following criteria:
- which is not UK tax resident;
- which exists to enable participants to take part in the benefits arising from acquisition etc of assets;
- where the participants do not have day-to-day control over management of the property; and
- where a reasonable investor would expect to be able to realise any investment based almost entirely by reference to the NAV of the assets under management or an index.
The guidance looks at the types of fund likely to be covered and the meanings of some of the terms used. HMRC asks for comment by 10 July.