An offshore fund will be certified as a distributing fund if it pursues a ‘full distribution policy’ (ICTA 1988, s. 760(2)). The distribution test is set out in ICTA 1988, Sch. 27, Pt. I, and consists of four conditions, in para. 1(1):

(1)a distribution must be made for the account period in question, or for some other period which falls wholly or partly in it (¶784-580);

(2)the amount paid to holders of material and other interests in the fund must:

(a)represent at least 85 per cent of the fund’s income for that period; and

(b)be not less than 85 per cent of the fund’s ‘United Kingdom equivalent profits’ for that period (¶784-585);

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