½Û×ÓÊÓƵ

B5.705 Charge to tax on participants

The regulations define offshore funds as either reporting funds or non-reporting funds. An offshore fund is a non-reporting fund unless it is a reporting fund to which Part 3 of the regulations applies (see B5.715)¹.

If a non-reporting fund which is a transparent fund (see B5.702) has an interest in a reporting fund any excess of reported income treated as made to the non-reporting fund²(see B5.720) is additional income of the participants in the non-reporting fund calculated in proportion to their rights. It is treated as relevant foreign income (see E1.602) of a participant chargeable to income tax, and miscellaneous income of a participant chargeable to corporation tax³. Also see E1.408 for the treatment of offshore fund distributions.

There is a charge to tax on a participant in a non-reporting fund if there is a disposal of an asset giving rise to an offshore income gain and either Condition A or B is met⁴. The normal definition of a disposal for capital gains