When the 20% rule is satisfied

The ‘20% rule’ (in ITA07/S835M and CTA10/S1146) is satisfied where the investment manager and any connected persons (as defined at CTA10/S1122 for corporation tax and ITA07/S993 and S994 for income tax) are not beneficially entitled to more than 20% of the taxable profits of the non-resident from transactions carried out through the investment manager. Where the 20% limit is exceeded in respect of one non-resident participating in a managed fund the exemption cannot apply in respect of the investment manager's transactions on behalf of that non-resident. The test is then applied separately to any other non-resident participators in the fund.

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