IFM12556 - Offshore Funds: Reporting Funds: computation of reportable income: transactions not treated as trading: clearances

Regulations 77 to 79 of SI 2009/3001

The manager of a reporting fund, or of a non-reporting fund that makes an application for reporting fund status under regulation 52, can apply for clearance that the fund meets the equivalence and the genuine diversity of ownership (‘GDO’) conditions. An application can also be made in respect of a prospective fund that intends to obtain reporting fund status.

Clearance applications should not be made as a matter of routine – there must be material uncertainty and if there is no doubt that a fund can demonstrate that it meets the GDO condition in regulation 75 or that it is, as a matter of fact, widely held (and continues to be so) then HMRC will accept that the GDO condition is met.

Applications

Applications for clearances must be in writing, accompanied by the documents specified in regulation 75(2) (relating to statements and undertakings by the fund). Applications should be clearly marked ‘Clearance Application - Equivalence & GDO Conditions’ and sent to HMRC’s Collective Investment Schemes Centre (CISC).

A pro forma application form (CISC4) that applicants may wish to use is available on gov.uk in the CISC pages.

HMRC response to applications

HMRC will notify the applicant within 28 days from when they receive the application and documents (or, if they request further information, within 28 days of receiving such further information) giving the clearance (which may be subject to conditions), or refusing clearance. HMRC will explain the reasons for any refusal, and such a refusal will not prevent a further application but clearly it would be expected that the reasons for the refusal would be addressed before a further application was made.

Reliance on clearances

A reporting fund may only rely on a clearance in relation to any period of account if the instrument constituting the fund or its prospectus includes a statement that is in accordance with the relevant statements in the documents provided to HMRC with the fund’s application (in accordance with regulation 75(2)) and the fund does not act in any way that is in contravention of any such statement. The fund must also continue to meet the GDO condition.

If the fund materially amends any of the documents sent with its original application then it must make a new application if it wishes to rely on a clearance.