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From 27 May 2011 the following rules do not apply to transparent reporting funds, as to which see B5.718A¹.

Certain transactions by offshore funds are not treated as trading transactions, and as such will be treated as capital items (see B5.717) and not part of the offshore fund's reportable income². Broadly if a diversely owned fund carries out investment transactions in an accounting period, the transaction is treated as a non-trading transaction³.

A diversely owned fund is a reporting fund:

1. Ìý

   •ÌýÌýÌýÌý which meets the equivalence condition throughout the period of account (see below), and

2. Ìý

   •ÌýÌýÌýÌý which meets, or in relation to a fund constituted by a class of interests in the main arrangements, the main arrangements meet, the following three conditions throughout the period of account (the genuine diversity of ownership condition)⁴:

3. 1. Ìý

      (1)ÌýÌýÌýÌý the fund produces documents available to investors and HMRC which contain details specifying the intended categories of investor, and an undertaking that interests in the fund will be widely available