Taxation (International and Other Provisions) Act 2010 section 357

Exceptions to definition of "mutual fund"

Section 357 sets out the circumstances in which arrangements that would otherwise meet the definition of a "mutual fund" under section 356 are excluded from that definition, thereby potentially taking them outside the offshore fund rules.

• Arrangements are not a mutual fund if investors can only realise their investment on winding up, dissolution or termination (condition D), and either condition E or condition F is also satisfied.
• Condition E is straightforward: the arrangements have no fixed or determinable termination date, meaning they are open-ended in duration.
• Condition F applies where there is a fixed termination date, but the arrangements also satisfy one of three additional tests relating to asset type, income entitlement, or income distribution, and the return is not in substance equivalent to interest.
• A mere provision allowing participants to vote on whether to wind up the arrangements does not, by itself, mean the arrangements are designed to terminate on a determinable date.