B5.718 Non-trading transactions by reporting funds
From 27 May 2011 the following rules do not apply to transparent reporting funds, as to which see B5.718A1.
Certain transactions by offshore funds are not treated as trading transactions, and as such will be treated as capital items (see B5.717) and not part of the offshore fund's reportable income2. Broadly if a diversely owned fund carries out investment transactions in an accounting period, the transaction is treated as a non-trading transaction3.
A diversely owned fund is a reporting fund:
(a) which meets the equivalence condition throughout the period of account (see below) ; and
(b) which meets, or, from 27 May 2011 in relation to a fund constituted by a class of interests in the main arrangements, the main arrangements meet, the following three conditions throughout the period of account (the genuine diversity of ownership condition)4:
(1) the fund produces documents available to investors and HMRC which contain details specifying the intended categories of investor, and an undertaking that interests in the fund will be widely available and will be marketed
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