Offshore funds in UK – Late applications for distributing fund status and late distributions
Late applications for distributing fund status and late distributions
HM Revenue & Customs (HMRC) has been asked recently to set out its views in relation to late applications for distributing fund status under Schedule 27 ICTA 1988.
Paragraph 15 Schedule 27 ICTA 1988 requires the appropriate application for an account period to be made to HMRC within six months of the end of the period or at such later time as the Board of HMRC may allow. HMRC now considers that, provided all other conditions for approval have been met for an account period, the lateness of an application alone will not be a bar to the acceptance of the application.
The question has also been posed as to whether HMRC would accept applications where the fund could only meet the requirements for distributing fund status by making late distributions to its participators. Paragraph 1 Schedule 27 ICTA 1988 requires that the appropriate level of distribution for a period must be made within six months of the end of that period or within such longer time as the Board of HMRC may allow. Generally, the Board of HMRC will only allow additional time for the payment of late distributions in the following circumstances:
- where the shortfall is trivial, or
- where the fund can show that the investor profile has remained constant for the period of application and subsequently, or
- where the fund had a reasonable excuse for not making the distribution within the appropriate time and it then made the distribution as soon as it was able.
