IFM12442 - Offshore Funds: Reporting funds: preparation of accounts: changes of accounting practice

Regulation 61 of SI 2009/3001

Where a fund changes its accounting practice in drawing up a reporting fund’s accounts from one period of account to the next period of account, and the accounts for the later period are in accordance with a generally accepted accounting practice (‘GAAP’), then -

  • if the accounts for the later period are prepared in accordance with international accounting standards (‘IAS’), the offshore fund is only required to give notice of that to HMRC; but
  • if the accounts for the later period are not prepared in accordance with IAS then the fund must apply to HMRC for approval of that GAAP, unless the GAAP in question has been approved by HMRC and included in a list on the HMRC web pages maintained by the Collective Investment Schemes Centre (‘CISC’) (see IFM12438 for further details). The application must be accompanied by a statement specifying the entries in the fund’s accounts that are considered to equate to “total comprehensive income for the period” as that expression is used in IAS.

HMRC must give notice to the offshore fund either accepting or rejecting the application within 28 days beginning with the day on which HMRC receive such an application.

Appeals against HMRC rejection of application

If HMRC reject an application, the person who made the application can appeal to the First-tier Tribunal within a period of 42 days beginning with the day on which a notice rejecting the application was given.

The Tribunal may either uphold or quash the rejection of the application.

Failure to apply for approval of GAAP not in accordance with IAS

Failure to make an application where required to do so by regulation 61 would be considered to be a ‘serious’ breach and would result in the fund ceasing to be a reporting fund (regulation 113(3) - see IFM12726).

Appeals against refusal of application to amend a statement

Where HMRC reject an application to amend any statements under regulation 53(1)(h) to (l) an appeal can be made by the manager to the First-tier Tribunal within a period of 42 days beginning with the day on which a notice rejecting the application was given.

The Tribunal may either uphold or quash the rejection of the application. If the tribunal quashes the rejection of the statement it is treated as if HMRC had accepted the application submitted.