Taxes Consolidation Act 1997 Schedule 19 paragraph 13

Disregarding of certain investments forming less than 5 per cent of a fund

Paragraph 13 of Schedule 19 allows an offshore fund to disregard certain shareholdings that would otherwise prevent it from being certified as a distributing fund, provided those holdings represent no more than 5% of the fund's total assets.

• A holding of more than 10% of the issued share capital of a company (or any class of that capital) is termed an "excess holding" and would normally prevent certification as a distributing fund.
• An excess holding may be ignored for the purposes of the distributing fund test if it falls within the 5% de minimis threshold.
• The 5% threshold is measured against the total assets of the fund and includes the combined value of all excess holdings and any interests in non-qualifying offshore funds.
• At no point during the account period may the combined value of these items exceed 5% of the fund's total assets.