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Amendment of Chapter 4 (certain offshore funds — taxation and returns) of Part 27 of Principal Act.
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51.— (1) Chapter 4 of Part 27 of the Principal Act is amended—
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(a) in section 747B(1)—
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(i) by inserting the following after the definition of “chargeable period”:
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“ ‘deemed disposal’ means a disposal of the type provided for in section 747E(6);”,
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and
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(ii) by inserting the following after the definition of “offshore state”:
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“ ‘relevant event’ means the ending of a relevant period, where ‘relevant period’ in relation to an offshore fund means a period of 8 years beginning with the acquisition of a material interest in the fund and each subsequent period of 8 years beginning immediately after the preceding relevant period;”,
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and
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(b) in section 747E—
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(i) in subsection (3)—
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(I) by renumbering the existing provision as paragraph (a), and
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(II) by inserting the following after paragraph (a):
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“(b) Where in respect of a material interest in an offshore fund—
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(i) a gain on a disposal is treated as nil in accordance with paragraph (a),
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(ii) that disposal is not a deemed disposal, and
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(iii) a person was chargeable to tax in respect of an earlier deemed disposal of a material interest in the fund,
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then the provisions of section 865 (apart from subsection (4)) shall apply and the inspector may make such repayment or set-off as is necessary for securing that the aggregate of tax payable in respect of the material interest in the fund under this section does not exceed the tax that would have been so payable in respect of the material interest in the fund if subsection (6) had not been enacted.”,
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and
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(ii) by inserting the following after subsection (5):
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“(6) Where a person has a material interest in an offshore fund and a relevant event occurs in respect of that fund, then the person shall be deemed for the purposes of this section to have disposed of the whole of the material interest immediately before the time of that relevant event and immediately to have reacquired it at its market value at that time.”.
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(2) This section applies as respects any relevant event (within the meaning of section 747B(1) of the Principal Act) occurring on or after the passing of this Act in respect of a material interest in an offshore fund (within the meaning of Chapter 4 of Part 27 of the Principal Act) acquired on or after 1 January 2001.
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