IFM12629 - Offshore Funds: Reporting funds: reporting obligations: reports to participants: equalisation amounts not treated as distributions

Regulation 94A of SI 2009/3001

Where a participant acquires an interest in an offshore reporting fund that operates full equalisation arrangements by way of initial purchase in a reporting period the regulations allow for two options:

Option 1

  1. The amount of any actual distributions to the participant in respect of the reporting period is reduced by the equalisation amount, and
  2. The amount of any excess of reportable income is reduced by the amount, if any, by which the equalisation amount exceeds the amount of any actual distributions to the participant in respect of the reporting period.

Option 2

  1. The amount of any excess of reportable income over distributions to be reduced by the equalisation amount, and
  2. The amount of any actual distributions to the participant in respect of the reporting period to be reduced by the amount, if any, by which the equalisation amount exceeds the excess.

For both options the amount of equalisation will not reduce the amount of reportable income or actual distributions below nil.

Where the amount of any actual distributions in respect of the period are reduced by the equalisation amount, the expenditure given for the acquisition of the asset is treated as reduced by the same amount in any subsequent disposal computation.