Excess income on Offshore Funds

Excess income on Offshore Funds

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The Offshore Funds Regulations (Tax) 2009 require investors to show on their self assessment tax returns “excess income”, which is income accumulated, but not distributed, by offshore funds which have reporting status.  Most brokers do not include this income in their annual tax packs as the regulations state that the fund managers must make available a report to “participators” (not nominees).  However, the report does not have to be personalised and merely states the amount of excess income per unit for the fund year.  Moreover, it only has to be published  and made accessible, usually via a website or printed in a newspaper.  This makes finding the information to complete tax returns very difficult and extremely time consuming; in my experience if you ask clients about this they don’t know what you’re talking about.  Are other practices experiencing similar problems and, if so, how are they dealing with this issue?

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By mcecazo
12th May 2014 17:50

it depends if the excess of income is higher than the distributed. If lower nothing needs to be done.

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Replying to DJKL:
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By JohnShep
13th May 2014 12:07

mcecazo - thanks for the response.  My point, however, was that until you have identified the funds and their status (which itself can be a time consuming exercise) and then located the reports, you cannot tell whether there is excess income to report or not.  It is the research and locating the reports which takes the time so I was trying to find out how other agents are approaching this issue.  Would be interested to know others are dealing with this. 

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By mcecazo
13th May 2014 13:00

if you want there is

 

you need to look at site ...they are obliged to post these info within 6 months

 

I understand the pain though, the stockbroker consolidated tax return should provide these info, agree?

 

if you want there is practical example from BLACKROCK ETF website ...which explain everything   

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By JohnShep
13th May 2014 17:24

Thanks for your further response.  I am fully aware of how the regulations work and what needs to be reported on the individual tax payer’s self assessment return.   My query relates solely to the practical problems of firstly identifying which of a client’s investments are reporting funds and, having done that, locating the necessary report on the fund manager’s website.  Reporting funds can be identified from the list on HMRC website at www.hmrc.gov.uk/collective/rep-funds.xls although this currently runs to almost 33,000 lines and without the ISIN number it is often very difficult to identify an investment (stockbrokers’ reports do not usually provide an ISIN number).  Once the reporting funds have been identified it is necessary to trawl through the fund manager’s website in an attempt to locate the required details of excess income.  This is all very time consuming in a commercial world where we charge clients for the time we spend dealing with their affairs.  I agree that the stockbrokers’ consolidated tax reports should ideally provide this information but they are not required to do so under the regulations and therefore most do not, presumably since they also find it too difficult.  If they cannot provide this information what chance do we stand!!  How are other practitioners addressing this problem?

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By CrowtherP
27th Oct 2015 12:02

John Shep - bewildering silence

John,

I agree, completely, I am suffering from the same syndrome expressed clearly in your posting.

I assume by the large silence, since your posting of May 2014, that nobody is doing very much in this area. The time spent would commonly appear to exceed the value of the tax loss to the UK Exchequer.

​Is there any easy out, other than ask the stockbrokers for the data that seems really very difficult to find?

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