Offshore Funds (Tax) Regulations


 

TIDMEBMB TIDMERS TIDMBAP TIDMUSH 
 
RNS Number : 6111D 
Harewood Structured Investment PCC 
04 December 2009 
 

Notice to holders of preference shares issued by Harewood Structured Investment 
PCC Limited (the "Company") 
This notice is for the attention of holders of preference shares issued by the 
following cells of the Company: the Enhanced Global Asset Allocation cell, the 
BNP Paribas FTSE Summit cell, the BNP Paribas Energy - Base Metals Secure Growth 
cell, the BNP Paribas UK High Income cell, the BNP Paribas Energy - Base Metals 
(2) cell, the BNP Paribas European Shield cell, the BNP Paribas Absolute 
Progression cell, the US High Income cell, the Euro High Income cell, the BNP 
Paribas Agrinvest cell, the Enhanced Property Recovery cell, the Energy - Base 
Metals (3) cell, the Enhanced Income cell, the BNP Paribas COMAC cell, the US 
Enhanced Income cell and the UK Enhanced Income cell (together the "affected 
cells"). 
The Offshore Funds (Tax) Regulations 2009 (the "Regulations") came into force on 
1st December 2009 and introduced a new regime for the United Kingdom tax 
treatment of Offshore Funds (as such are defined in the Regulations).  The 
Company has been advised that under the previous regime the Company, in respect 
of all its cells, was not treated as an Offshore Fund.  However, it is likely 
that each series of preference shares issued by the affected cells of Company 
(the "affected Preference Shares") will each become an Offshore Fund for the 
purposes of this new regime. 
Under the new regime, an Offshore Fund (such as a series of affected Preference 
Shares issued by the Company) may apply to H.M. Revenue & Customs to become a 
"Reporting Fund". If such an Offshore Fund does not become a Reporting Fund, 
then that Offshore Fund would be a "Non-Reporting Fund". Broadly, a United 
Kingdom resident individual holding an interest in a Reporting Fund would be 
subject to income tax on the income of the fund whether or not that income is 
distributed to investors, while sales and other disposals of interests in 
Reporting Funds would be subject to capital gains tax. A United Kingdom resident 
individual holding an interest in a Non-Reporting Fund" would generally only be 
subject to income tax on income of the fund which is actually distributed, but 
gains arising on sales and other disposals of interests in Non-Reporting Funds" 
would be subject to income tax. 
The Company intends to apply to H.M. Revenue & Customs for each of its series of 
affected Preference Shares in respect of an affected cell to become a Reporting 
Fund with effect from and including the 12 month period commencing on 1st 
November 2009 and ending on 31st October 2010.  Gains arising on sales and other 
disposals of these Preference Shares by United Kingdom resident individual 
shareholders (the "Shareholders") after the new regime takes effect will 
continue to be charged to capital gains tax. Certain Shareholders, such as 
dealers in securities, may nevertheless be subject to income tax in relation to 
their Preference Shares on general principles. 
The Company will be required to compute and report to Shareholders in any 
affected cell the "Reportable Income" for each period of account of each of its 
series of Preference Shares. If this "Reportable Income" for a period of account 
of such an affected cell exceeded the distributions made to Shareholders during 
that period, Shareholders who acquired such affected Preference Shares on or 
after 1st December 2009 would be treated as receiving, and would be subject to 
income tax on, an additional deemed distribution equal to the excess 
(notwithstanding that no such distribution is in fact made).  The Company 
expects that for each period of account for each of its series of affected 
Preference Shares, Reportable Income will not exceed distributions made to 
Shareholders and accordingly Shareholders, while subject to income tax on actual 
distributions received, should not be subject to income tax on any deemed 
distributions under the new regime. 
United Kingdom resident individuals in receipt of dividends from non-United 
Kingdom companies are generally entitled to a non-payable dividend tax credit 
equal to one-ninth of the grossed up dividend. However, there is no entitlement 
to this tax credit if the dividends are paid by an Offshore Fund in 
circumstances where the Offshore Fund fails to meet a "qualifying investment 
test".  The Company expects that each of its series of dividend paying 
Preference Shares will meet this test and that Shareholders should generally, 
subject to their own circumstances, be entitled to a tax credit in respect of 
dividends paid on such Preference Shares. Dividend paying Preference Shares 
include those issued by the BNP Paribas UK High Income cell, the US High Income 
cell, the Euro High Income cell, the Enhanced Income cell, the US Enhanced 
Income cell and the UK Enhanced Income cell. 
The purpose of this notice is to provide a summary of the Company's 
understanding of the effect of the new regime to the United Kingdom tax 
treatment of Preference Shares for United Kingdom resident individuals. This 
notice is not intended to be, and should not be construed as, tax advice. The 
United Kingdom tax treatment of Shareholders depends on their individual 
circumstances and may be subject to change in the future.  Shareholders who may 
be unsure as to their tax position should seek their own professional advice. 
 
 
For further information contact: 
BNP Paribas 
Tel: 0207 595 8056 or E-mail: harewood_solutions@bnpparibas.com 
 
 
Anson Fund Managers Limited 
Secretary 
Tel: Guernsey 01481 722260 
 
 
4 December 2009 
END OF ANNOUNCEMENT 
 
 
E&OE - In transmission 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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