SAIM6320 - Collective investment schemes: offshore funds: what is a non-qualifying fund?

Non-qualifying funds

The information in this manual applies to transactions up to 30 November 2009. The Offshore Funds Manual is currently being updated for the offshore funds regime from 1 December 2009.

An offshore fund is a non-qualifying fund at all times except in relation to a period for which it has been certified as a distributing fund.

The Collective Investment Schemes Centre Sheffield decides whether or not a fund will be certified as a distributing fund and questions on this point should be addressed to them.

Guidance on certification is available to fund managers and may be located on the HMRC website at www.hmrc.gov.uk/manuals/osfgmanual/index.htm 

It is important to remember that if a fund has been a non-qualifying fund at any time during a UK investor’s period of ownership of a material interest (SAIM6340) in that fund, any gain arising on that investor’s disposal of his holding will attract the possibility of a charge to tax under Schedule D Case VI or ITTOIA05/PT5/CH8. This will be the case even if the fund may have attained distributing fund status for another period or periods before, during or after the period of ownership in question.