Taxes Consolidation Act 1997 Schedule 19 paragraph 6

Exclusion of investments in distributing offshore funds

Schedule 19, paragraph 6 provides relief for an offshore fund (the "primary fund") that would otherwise fail the distributing fund tests solely because it holds investments in another offshore fund that is itself a distributing fund.

• Where a primary fund fails the asset-holding limits in section 744(3)(a), (b) or (c) because of its investment in another offshore fund, it may still qualify as a distributing fund if that other fund (the "qualifying fund") is itself certified as a distributing fund.
• The qualifying fund must be certified for an account period that coincides with, or overlaps, the primary fund's account period.
• If the conditions are met, the primary fund's interest in the qualifying fund is disregarded when applying the section 744(3) tests — except for the purpose of calculating the total value of the primary fund's assets.
• This relief applies only to two-tier structures; if the qualifying fund itself holds interests in further offshore funds, the relief does not extend down to the third tier.