Taxation of Chargeable Gains Act 1992

[F1 7 (1) This paragraph applies to a disposal which would otherwise have an appropriate connection to a collective investment vehicle as a result of paragraph 6(3), (5) or (6). U.K.

(2) A disposal does not have an appropriate connection to a collective investment vehicle if, at the time of the disposal, [F2 the vehicle mentioned in paragraph 6(3)(a) or (5), or each of the vehicles mentioned in paragraph 6(3)(b) or (6),] meets—

(a) the non-UK real estate condition, and

(b) the genuine diversity of ownership condition or, if the vehicle is a company, the non-close condition.

(3) If—

(a) a disposal is made as mentioned in paragraph 6(6), and

(b) the vehicle mentioned there is constituted by two or more persons carrying on a trade or business in partnership,

the condition in sub-paragraph (2)(b) is taken to be met if the company mentioned in paragraph 6(6) meets the non-close condition.

(4) A vehicle meets the non-UK real estate condition at any time if, by reference to the prospectus for the vehicle as the prospectus has effect at that time, no more than 40% of the expected market value of the vehicle's investments is intended to derive from investments consisting of—

(a) interests in UK land, or

(b) rights or interests in companies which are UK property rich.

(5) A vehicle meets the genuine diversity of ownership condition at any time if, at that time—

(a) it meets [F3 the conditions in regulation 75(2), (3) and (4)(a)] of the Offshore Funds (Tax) Regulations 2009, or

(b) it meets the condition in regulation 75(5) of those Regulations [F4 (assuming for this purpose that regulation 75(4)(b) is omitted)],

and those Regulations apply for the purposes of this sub-paragraph as if any collective investment vehicle which is not an offshore fund were regarded as an offshore fund [F5 (and see also paragraphs 46A and 51)].

(6) A company meets the non-close condition at any time if, at that time, it—

(a) is not a close company, or

(b) is a close company but only because it has a qualifying investor as a direct or indirect participator.

(7) Paragraph 46 (meaning of “close company”, “qualifying investor” and “direct or indirect participator”) applies for the purposes of sub-paragraph (6).]

Textual Amendments

F1 Sch. 5AAA inserted (with effect in accordance with Sch. 1 paras. 120, 123 of the amending Act) by Finance Act 2019 (c. 1), Sch. 1 para. 21

F2 Words in Sch. 5AAA para. 7(2) substituted (24.3.2021) by The UK Property Rich Collective Investment Vehicles (Amendment of the Taxation of Chargeable Gains Act 1992) Regulations 2021 (S.I. 2021/213), regs. 1(1), 5

F3 Words in Sch. 5AAA para. 7(5)(a) substituted (with effect in accordance with reg. 1(3) of the amending S.I.) by The UK Property Rich Collective Investment Vehicles (Amendment of the Taxation of Chargeable Gains Act 1992) Regulations 2020 (S.I. 2020/315), regs. 1(1), 6(a)

F4 Words in Sch. 5AAA para. 7(5)(b) inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The UK Property Rich Collective Investment Vehicles (Amendment of the Taxation of Chargeable Gains Act 1992) Regulations 2020 (S.I. 2020/315), regs. 1(1), 6(b)

F5 Words in Sch. 5AAA para. 7(5) inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The UK Property Rich Collective Investment Vehicles (Amendment of the Taxation of Chargeable Gains Act 1992) Regulations 2020 (S.I. 2020/315), regs. 1(1), 6(c)