Introduction Overview Overview Section 1147: Investment managers: the 20% rule
3269.This section sets out the “20% rule” for investment managers. It is based on paragraph 4(1) of Schedule 26 to FA 2003.
3270.The 20% rule has two requirements. The first requirement is that the investment manager and connected persons must intend that any interest that they may have in the non-UK resident’s “relevant disregarded income” does not exceed 20% of that income. The second requirement applies if that intention is not fulfilled. The 20% rule continues to be met if the only reason why it is not fulfilled is because of matters outside the control of the investment manager or connected persons despite their having taken reasonable steps to mitigate the effect of those matters.
3271.In subsection (2) the term “relevant disregarded income” has been substituted for the term “relevant excluded income” which appears in paragraph 4(1) of Schedule 26 to FA 2003. The same substitution was made in section 819(2) of ITA which is also based on paragraph 4(1) of Schedule 26 to FA 2003.