In the Press Release (Rev/C&E1) reference is made to the Government taking forward work to replace the offshore fund regime with new rules in the Finance Bill 2003. No definite proposals are put forward at this stage and consultation will continue. However, the results of the consultation so far are made available. The majority ruled out abolition, favouring reform or replacement of the current scheme.
The April 2002 consultation document runs to 31 pages and starts with a clear summary of the scope and intention of the review. It made clear that (in the Inland Revenue's view) the time has come to review the appropriateness of legislation that dates from 1984 (the "offshore funds regime”) and whose aim was to prevent investors using such funds to reduce, or even eliminate, the tax they would otherwise pay on their savings income. The Government's aim is the same today – ie. that investors should pay tax on their investment in offshore funds to the same extent as they do in comparable products such as UK based unit trusts and OEICs.
The Government are, however, committed to taking fully into account (as well as their own needs) the needs of investment providers and investors. The Government are also committed to promoting simplicity without undue compliance burdens. The Government wishes, in addition, to enable the fund management industry to promote its funds without undue compliance burdens in Europe and other major international markets.