EXPLANATORY MEMORANDUM TO
THE AUTHORISED INVESTMENT FUNDS (TAX) (AMENDMENT)
REGULATIONS 2010
2010 No. 294
1.
This explanatory memorandum has been prepared by HM Revenue and
Customs and is laid before the House of Commons by Command of Her
Majesty.
This memorandum contains information for the Select Committee on Statutory
Instruments.
2.
Purpose of the instrument
2.1
To adjust the tax regime for authorised investment funds (AIFS) which
invest substantially in offshore funds which may in turn retain untaxed
income (non-reporting funds) so that the tax charge on disposal of such
interests does not fall to the AIF but instead is charged on the (UK
resident) investor in the AIF.
2.2
To reflect changes to the regulatory framework made by the Financial
Services Authority (FSA) on 28 January 2010 and coming into force
on 6 March 2010.
2.3
To update the list of qualifying investments that may allow an AIF to
make interest distributions to include relevant investments in offshore
funds.
3.
Matters of special interest to the Select Committee on Statutory
Instruments
3.1
None
4.
Legislative Context
4.1 AIFs are within the charge to Corporation Tax and as such may be liable
for corporation tax on an offshore income gain under offshore funds tax
legislation (Regulations 17 and 18 of The Offshore Funds (Tax)
Regulations 2009 (SI 2009 No. 3001). In the case of AIFs investing
substantially in non-reporting funds this instrument amends those
regulations to remove any charge as well as amending the Authorised
Investment Funds (Tax) Regulations 2006 (SI 2006 No. 964) (AIF
Regulations) to impose a charge to tax on income on the investor in
respect of any gains made on disposal of an interest in the AIF.
4.2 The instrument also amends the AIF Regulations to reflect changes to the
terminology used in FSA regulations (The Collective Investment Schemes
Sourcebook (Accounting Amendments) Instrument 2010 made on 28
January 2010.
4.3 Regulations 19 to 21 in the AIF R