Taxes Consolidation Act 1997 section 747F

Reconstructions and amalgamations in offshore funds

Section 747F provides that a reconstruction or amalgamation of an offshore fund is treated as tax-neutral for the investor, so that no taxable gain arises on the exchange of interests.

• A scheme of reconstruction or amalgamation is an arrangement where each holder of a material interest in an offshore fund receives, in its place, a proportionate material interest in another offshore fund, and the value of the original interest becomes negligible as a result.
• Where a person disposes of an old interest and receives a new interest under such a scheme, the disposal does not give rise to a chargeable gain.
• The new interest is treated as having been acquired at the same time and at the same cost as the old interest it replaced.
• The effect is full rollover relief: the tax position carries forward unchanged into the replacement holding in the new fund.