IFM13230 | Offshore Funds: participants in offshore funds: participants within the charge to corporation tax: tax transparent reporting funds

There is an overview of the treatment of transparent entities that come within the definition of an offshore fund at IFM12250 to IFM12252.

In the hands of investors in transparent offshore funds, the income arising from the investment retains its original character (as property income, interest, dividends and so on).

Under regulation 92D, a transparent reporting fund is required to provide a report to participants for each reporting period that contains sufficient information to enable the participants to meet their tax obligations in the UK. The report must also contain a statement as to whether or not the fund remains a reporting fund at the date the fund makes the report available.

These funds are transparent for income purposes only and remain opaque for capital gains purposes. So, the capital gains in transparent offshore funds will only arise to a UK investor on the disposal (deemed or actual) or part-disposal by the investor of their investment in the fund and not on the disposal by the fund of any of its underlying assets.