Reporting offshore funds—accounts, computation and equalisation
Produced in partnership with Michael Alliston of Herbert Smith Freehills LLP
Reporting offshore funds—accounts, computation and equalisation

The following Tax guidance note Produced in partnership with Michael Alliston of Herbert Smith Freehills LLP provides comprehensive and up to date legal information covering:

  • Reporting offshore funds—accounts, computation and equalisation
  • Duties of reporting funds
  • General duties of reporting funds
  • Preparation of accounts
  • Computation of reportable income
  • Computation of reportable income—general rules
  • Adjustments for capital items
  • Adjustments for special classes of income
  • Equalisation

STOP PRESS relating to calculation of reportable income: As announced at Autumn Statement 2016, regulations were introduced with effect for reporting periods commencing on or after 1 April 2017 which amend the definition of 'reportable income' from offshore funds so that performance fees incurred by offshore reporting funds will not be deductible when calculating investors' reportable income. Instead, performance fees will reduce investors' taxable gains when they dispose of their holding in an offshore reporting fund.

In order to retain its reporting fund status, a reporting fund must comply with certain obligations. This Practice Note describes:

  1. the requirements in respect of a fund's accounting policies and practices, and the calculation of its reportable income, and

  2. 'equalisation arrangements', which enable the income that existing investors receive (or have allocated to them) from a fund to be unaffected by new investors purchasing units in a fund

Duties of reporting funds

The duties of reporting funds can be divided into the following broad categories:

  1. general duties of reporting funds

  2. preparation of accounts, and

  3. computation of reportable income

General duties of reporting funds

On being approved as an offshore fund, a fund has to meet certain obligations to both its UK investors and HMRC to continue to be approved as a reporting fund for each reporting period.

Reporting funds are required

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