Explanatory note

These Regulations amend the Offshore Funds (Tax) Regulations 2009, which make provision for the tax treatment of participants in offshore funds.

The amendment to regulation 17 (the charge to tax) clarifies the application of that regulation where the interest in the offshore fund which is disposed of was acquired in consequence of an award of variable remuneration to an alternative investment fund manager which is represented by profit allocated under section 863I of the Income Tax (Trading and Other Income) Act 2005.

The amendment to regulation 48 (consequences of conversion for participants) provides that a participant whose interest represents such variable remuneration cannot elect to be treated as making a disposal and acquisition on a conversion of the fund from a non-reporting fund to a reporting fund prior to the vesting of that remuneration.

A Tax Information and Impact Note covering this instrument was first published on 5 December 2013 and is available on the HMRC website at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/264620/4._Partnerships.pdf This remains an accurate summary of the impacts that also apply to this instrument.