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Offshore Income Gain query

Non-reporting fund shares exchanged for non-reporting fund shares

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Have just been reviewing TCGA 1992 s135-139 and HMRC's offshore income manual 14300. My understanding is that no offshore income gain would be created where shares in a non-reporting fund is simply exchanged for shares in another non-reporting fund - the exceptions covered in the manual only apply if the new shares are in a reporting fund.

Would anyone kindly be able to confirm that my understanding is correct? Many thanks in advance.

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By Tax Dragon
19th Jun 2019 10:58

I doubt you'll find your answer in TCGA.

You need to be looking at the Regs… is it 2009/3001?

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By ms998
19th Jun 2019 11:06

Try TCGA s136 / Sch5AA and SI 2009/3001 Regulation 36

You essentially get roll over of gains going from Non Reporting to Non-Reporting.

The fund manager running the re-construction would normally be providing high level tax advice in relation to the merger. It might be worth looking at the documentation. This may not be applicable if the fund was not marketed to UK or insufficient AUM in the UK to make it cost effective,

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Replying to ms998:
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By Tax Dragon
19th Jun 2019 13:07

Reg 36A was substituted for Regs 35 and 36 by SI 2013/1400, Reg 15(a).

But you're right... I was wrong, TCGA could give a negative answer without any help from the Regs.

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Replying to Tax Dragon:
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By ms998
19th Jun 2019 16:55

I was using an out of date tolleys book (tut tut me!)

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By gainsborough
19th Jun 2019 13:05

Many thanks both for your very helpful responses.

Unfortunately, there is no paperwork to review - this was an Indian Mutual Fund where HDFC merged one fund into another. Neither appears on HMRC's list of reporting funds, so I will go on the basis of SI 2009/3001 Regulation 36. Thanks again for the pointers!

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