New queries, issue 4568

Between the lines

Legislative quirk concerning deemed income from offshore reporting funds?

I have been studying The Offshore Funds (Tax) Regulations 2009 (Statutory Instrument 2009/3001) and there seems to be an opportunity to mitigate income tax on deemed income.

Many reporting funds do not make any distributions and it strikes me that deemed income from any such fund can be reduced simply by ensuring that there is no holding in the fund at the end of any reporting period. I note that any deemed income if it cannot be mitigated is added to the base cost of the holding for capital gains tax purposes to prevent it being taxed twice.

Money realised from the disposal of a fund could be reinvested in another fund or alternatively a holding in the same fund could be reacquired at the beginning of the next reporting period....