Offshore rules exempt investment managers

HMRC have confirmed that the regulations contained within chapter 6 of part 3 of the Offshore Funds (Tax) Regulations 2009 – which set out when transactions by certain offshore 'reporting' funds are not treated as trading transactions for the purposes of computing 'reportable income' – have no relevance to matters relating to the taxation of such funds potentially trading in the UK through a permanent establishment or agent.

Regulation 80(2) which confirms that certain transactions are treated as non-trading transactions applies only for the purposes of chapter 5 of the regulations: i.e. to decide an offshore fund's reportable income in order to establish the UK tax position of participants in the fund.

HMRC say that the regulations are made under powers enabling provision to be made about the tax treatment of participants in an offshore fund (FA 2008 s 41) and...