Investor tax reporting services
The UK offshore fund tax regime seeks to provide more certainty and commercial viability for offshore funds. A reduction in the rate of capital gains tax from 6 April 2016 has made the reporting fund regime even more attractive to funds seeking to market themselves to UK investors.
UK Tax - RFS regime
Key Features
Up-front registration |
✅ |
| Taxation mechanism | Income based |
Annual reporting |
✅ |
Deadline of the reporting |
6 or 10 months after financial year-end |
| Reporting to | Her Majesty's Revenue and Customs (HMRC) |
| Complex tax adjustments | Target funds, derivatives, bonds |
Main features
Offshore funds with Reporting Fund Status (“RFS” - reporting funds) are treated as if they were UK funds for Investor taxation purposes.
Funds with UK Reporting Fund Status have to report their ‘income’ returns to UK investors and HM Revenue and Customs ("HMRC"). While investors are taxed on the income returns of the fund annually (whether distributed or not), they benefit from capital gains treatment on any gains realised on exit from the fund.
In contrast, investors in funds without RFS (non-reporting funds) are taxed only on amounts distributed, however any gain realised on disposal is treated as income in the hands of UK investors and taxed at the highest rate.
To enter the regime, an upfront application must be submitted to HMRC before the financial year-end of the fund. An annual tax reporting must be then filed to HMRC within 6 months (extension to 10 months possible) after the financial year-end of the fund.
There are significant differences in the calculation of reporting figures between corporate-type funds (SICAVs) and contractual-type funds (FCPs).
By entering the UK RFS regime, reporting funds are listed on the UK tax authorities ("HMRC") website and can market themselves to investors as a qualifying fund. The RFS provides a significant marketing advantage when attracting investors, retails or professionals.
Benefits of the regime
The RFS regime provides a significant advantage as investors benefit from capital gains treatment on any gains realised on exit from the fund which are considerably lower than income gains tax rates that would have applied for a non reporting fund.
Scope of services
- Registration and maintenance with HMRC;
Calculation or review of annual publications;
Reporting to UK regulator;
Regulatory watch on tax and fund reporting;
Consultancy and fund structuring.
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Contact us
Christian Heinz
Tax Partner, Global Tax Compliance Leader, PwC Luxembourg
Tel: +352 621 33 2247
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