The UK’s Reporting Fund Status regime provides UK investors with the potential to access a preferential tax treatment, but with the end of the year fast approaching it is critical that managers do not miss the registration and election deadlines. The reporting fund status legislation has strict cut off points that are often overlooked, leading to some unwelcome surprises for investors in the new year. The below checklist highlights the key points to be considered by managers of funds with UK reporting fund status before the end of the year and take necessary action where required.

Applications / Elections

  • Are there any new funds, strategies, share classes / series launched during the year that require UK reporting fund status before year end?
  • Are there any new UK investors in existing share classes that did not have UK reporting fund status previously that need to be registered before year end?
  • Has it been three years since the Excess Reportable Income calculation method elections were made in the UK reporting fund status application / annual submission?
  • Check whether each share class is in a net subscription or redemption position for the period and how this impacts the UK reporting fund status annual calculations. Does this need to be changed and HMRC notified pre year end?

Structure / Documentation

  • Have there been any structural changes to the fund? For example any feeders, asset holding vehicles etc. that may require consideration from a UK reporting fund status perspective.
  • Are there any changes to fee structures, new charges that may impact the analysis for UK reporting fund status purposes?
  • Is there any new documentation, for example prospectus, offering memorandum, put in place during the year that may need to be reviewed to confirm suitability from a UK reporting fund status perspective?
  • Have there been any changes to the IMAs, marketing material that are relevant for UK reporting fund status purposes?

Portfolio Review

  • Have there been any material changes to the funds strategy / portfolio overview that should be considered for UK reporting fund status purposes?
  • What are the sources of income for the fund? Eg. dividends, interest, trading income i.e. items that may impact the UK reporting fund status calculations.
  • Does the fund have any holdings in other offshore funds? If so, do these holdings have UK reporting fund status?
  • Does the trading vs investing status need to be reviewed for suitability to the UK reporting fund status regime?

HMRC Communication

  • Have investors received any nudge letters from HMRC in relation to their offshore holding in a fund with UK reporting fund status?
  • Has the fund / manager received any communication / enquiries / fines from HMRC in relation to a fund with UK reporting fund status?
  • Have annual submissions been received?

Offshore funds with UK reporting fund status and their managers must consider the above check list well in advance of year end to avoid any unnecessary pit falls and take action in good time so as not to fall foul of the UK reporting regime.