"The new UK tax regime for offshore funds came into force on 1 December 2009 broadly as planned, with relatively few significant changes since HM Treasury's original proposals. The new rules can be found in the Offshore Funds (Tax) Regulations 2009 (SI 2009/3001) and relevant parts of the Finance Act 2009. Under the new rules, offshore funds will be able to opt into a new 'reporting fund' regime that not only achieves greater tax certainty and a likely tax efficient option for investors, but also greater administrative convenience for fund managers. Investments in certain fund of funds may with appropriate structuring prove particularly tax efficient and may therefore be of interest to investors and their advisers.

Investors in non-UK funds that were not previously classed as offshore funds as well as investors in pre-1 December offshore funds (including non-'material interest' holders) may find themselves subject to the new regime, owing to the new definition of an offshore fund and abolition of the 'material interest' rule. Following HMRC's recent announcements, further regulations will be made shortly to improve grandfathering and other transitional arrangements"