The purpose of the offshore funds rules is to prevent UK investors using offshore funds to convert income flows into capital gains. It does this by ensuring that the realisation of an interest in an offshore fund is taxed as income rather than as a chargeable gain, unless certain conditions are met.

Legislation and regulations

The rules can be found in TIOPA 2010, Pt. 8 which provides for the definition of offshore fund, and the Offshore Funds (Tax) Regulations 2009 (SI 2009/3001), which provides the detailed rules.

Meaning of offshore fund

The definition of offshore fund is provided by TIOPA 2010, Pt. 8, a characteristics based meaning. See ¶783-100.

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