OSFG01080 - De Minimis Claim

Paragraph 1(2) Schedule 27 ICTA 1988

Notwithstanding that a fund has made no distribution for an account period it may be regarded as pursuing a full distribution policy, and thus meet one of the tests for certification, if one of two conditions is present. These are that

• there is no income of the fund and UKEP are nil

or

• the amount of the gross income of the fund or sub-fund for which application is being made does not exceed 1% of the average value of the fund’s or sub-fund’s assets held during the account period.

To qualify for this relaxation the fund must have made up accounts. In this context

• Income = accounts income
• Gross income of the fund = accounts income before expenses
• Average value of the fund’s assets = average value of gross assets for the whole of the year in question rather than the value on a single day.

Below is a suggested approach that might be adopted when submitting a claim for certification on this basis.

Paragraph 1(2) Schedule 27 ICTA 1988

• Average Value of fund’s gross assets during Account Period - (A)
• 1% of (A) = (B)
• Gross Income of fund for Account (C)
• Is (C) Less Than (B)? - YES/NO

If the answer is YES, then you may make a claim for certification on de minimis grounds and the fund is accepted as being a distributing fund for that accounting period.

If the answer is NO, then the fund needs to make the appropriate level of distribution for that accounting period.