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Excess Reportable Income in Offshore Funds (ERI)

Where To Disclose ERI Income on Tax Return

Stockbroker sent letter to me as tax agent a few months ago with statement showing 2015/16 Excess Reportable Income (ERI) of £10 in relation to a quoted Irish Bond Fund (an interest-paying overseas fund).

Client was R40 case for 2015/16. I added the £10 ERI onto the 2015/16 R40 tax software as additional Irish bond interest. It made no difference at all to the 2015/16 income tax repayment (already made by HMRC).

I am therefore minded to merely file the stockbroker's letter away. But as a matter of interest, and for the future reference of AWeb readers, do I take it that any Excess Reportable Income in Offshore Funds (ERI) will be treated as either a) overseas bond interest, or b) overseas dividend income (depending on whether the underlying investment is an interest or equity investment). If that is correct then presumably the figure is merely added to the respective type of overseas income on the foreign pages of the SA tax return or R40.

And if the omitted income figure is within the £1,000/£500 interest 0% band or £2,000 dividend 0% band then there will be no consequence of the omission, save a letter to HMRC explaining that an omission has occurred.

Have I understood the position correctly. I can see no box dedicated to ERI on the R40 or SA tax return.

 

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By ms998
18th Apr 2019 13:50

In short, yes you are correct with your analysis.

Remember to adjust the cgt base cost of the asset for the income you've declared but not received (much like a UK acc unit)

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to ms998
19th Apr 2019 01:12

Great. Thanks for that.

So, in this particular case, if the investment originally cost the client £10,000 then the CGT base cost after the 2015/16 ERI would then become £10,010.

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