Taxes Consolidation Act 1997 Schedule 19 paragraph 11

Offshore funds with wholly-owned subsidiaries

Paragraph 11 of Schedule 19 provides for the consolidation of a wholly-owned subsidiary's financial data with that of its parent offshore fund when applying the distributing fund tests under section 744(3) and Part 1 of the Schedule.

• Where an offshore fund has a wholly-owned subsidiary company, the subsidiary's receipts, expenditure, assets and liabilities are attributed to the parent fund in proportion to its shareholding, for the purposes of the distributing fund tests.
• A "wholly-owned subsidiary" means a company whose entire issued share capital is owned by the fund — or, where there is only one class of share capital, at least 95 per cent of it.
• The parent fund's interest in the subsidiary and all payments passing between parent and subsidiary (including distributions) are disregarded when applying the tests.
• The effect is that the parent fund and subsidiary are assessed as a single economic unit for the purpose of determining whether the fund qualifies as a distributing fund.