{"id":19848,"date":"2019-12-12T10:06:40","date_gmt":"2019-12-12T10:06:40","guid":{"rendered":"https:\/\/smh.group\/?p=19848"},"modified":"2023-02-15T13:39:16","modified_gmt":"2023-02-15T13:39:16","slug":"hmrc-keeps-an-eye-on-offshore-fund-investors","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/hmrc-keeps-an-eye-on-offshore-fund-investors\/","title":{"rendered":"HMRC keeps an eye on offshore fund investors"},"content":{"rendered":"\n<p><strong>In early November, HMRC undertook a distinctly\nnon-festive bulk mailing. <\/strong><\/p>\n\n\n\n<p>\u201cWe receive information about investment funds and this\ninformation shows that you may have invested in Offshore Investment Funds.\u201d<\/p>\n\n\n\n<p>Those slightly discomforting words are contained in a\nletter which HMRC sent out in early November. It was sent to a subset of\ntaxpayers whose tax affairs are dealt with by HMRC\u2019s Wealthy &amp; Mid-Sized\nBusiness unit. What the letter shows is:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>HMRC continues to be focused on offshore\nevasion as an area to raise additional revenue. It makes sense for HMRC to do\nso \u2013 the \u2018Panama Papers\u2019 exposure of 2016 is reported to have netted \u00a3190m so\nfar for the Exchequer.<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>The Common Reporting Standard (CRS), which\ncame fully into force in October 2018, is now being used by HMRC to target\nindividuals. The CRS provides an automatic exchange of information between the\ntax authorities of over 100 countries. <strong>&nbsp;<\/strong><\/li><\/ul>\n\n\n\n<p>As HMRC says in its letter, \u201cHow to treat amounts gained from an investment fund can be complex.\u201d<strong> <\/strong>Most of the offshore funds now marketed to UK resident investors are \u2018reporting\u2019 funds and many of these distribute all of the income they receive. As a result, their tax treatment is very much like their UK-based counterparts, with any gains subject to <strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/devstagesite.co.uk\/smhgroup\/chartered-accountants\/taxation\/capital-gains-tax\/\">capital gains tax<\/a><\/span><\/strong>. However, problems start to arise when some of the income of a \u2018reporting\u2019 fund is accumulated within the fund. Such unseen income remains taxable as personal income. <\/p>\n\n\n\n<p>Unsurprisingly, the other category of offshore fund is a \u2018non-reporting fund\u2019. If these types of fund distribute income, then it is taxable in the normal way as either dividends or interest. However, any capital gains \u2013 including those from accumulated income \u2013 are taxed under <strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/devstagesite.co.uk\/smhgroup\/chartered-accountants\/taxation\/income-tax-national-insurance\/\">income tax <\/a><\/span><\/strong>rules on sale. That harsher treatment explains why \u2018non-reporting\u2019 funds are not often recommended to UK resident investors.<\/p>\n\n\n\n<p>HMRC\u2019s action does not mean offshore funds should be avoided. In some circumstances, they have a valuable role to play. One point that the HMRC letter effectively does make is that if you want to invest in these types of funds, you need advice to avoid the potential tax pitfalls.<\/p>\n\n\n\n<p>If this is a cause of concern for you, speak to one of our <strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/devstagesite.co.uk\/smhgroup\/financial-services\/\">Chartered Financial Planners<\/a><\/span><\/strong> on <strong>0114 266 4432<\/strong> or email <strong><span style=\"text-decoration: underline;\"><a href=\"mailto:info@smhca.co.uk\">info@smhca.co.uk<\/a><\/span><\/strong><\/p>\n\n\n\n<h6 class=\"wp-block-heading\"><em>Tax laws can\nchange. The Financial Conduct Authority does not regulate tax advice. <\/em><em>&nbsp;<\/em><em>The value of your investment can go down as well as\nup and you may not get back the full amount you invested. Past performance is\nnot a reliable indicator of future performance.<\/em><em> <\/em><em>&nbsp;Investing in shares should be\nregarded as a long-term investment and should fit in with your overall attitude\nto risk and financial circumstances.<\/em><em><\/em><\/h6>\n","protected":false},"excerpt":{"rendered":"<p>In early November, HMRC undertook a distinctly non-festive bulk mailing. <\/p>\n","protected":false},"author":4,"featured_media":18045,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[4,16],"tags":[69,424,77,11,21,422,421,423],"class_list":["post-19848","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-chartered-tax-advisers","category-financial-services","tag-capital-gains-tax","tag-chartered-financial-planners","tag-financial-planning","tag-hmrc","tag-income-tax","tag-offshore-funds","tag-offshore-investment","tag-offshore-investment-funds"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - 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