SCHEDULES

F1SCHEDULE 5AAAUK property rich collective investment vehicles etc

PART 4Exemption

Deemed disposal: payments not otherwise taxable where value derived from direct or indirect disposals of UK land

21

(1)

This paragraph applies if—

(a)

an election under paragraph 12 that has been made in respect of a qualifying fund or qualifying company has effect at any time,

(b)

a participant in the relevant fund is entitled to receive an amount at that time (“the relevant time”) which represents, in substance, value derived (directly or indirectly) from a direct disposal of UK land or from the UK land component of an indirect disposal of UK land, F2...

(c)

the amount is regarded as being of a revenue nature and does not fall to be taken into account for the purposes of income tax or corporation tax on income F3...F4, and

(d)

some or all of the value which is represented by the amount does not fall to be taken into account for the purposes of income tax or corporation tax on income.

(2)

In the case of an election made in respect of a qualifying fund, the participant in the relevant fund is deemed for the purposes of this Act—

(a)

to have sold its units in the relevant fund immediately before the relevant time at their market value immediately before that time F5(as adjusted, if applicable, in accordance with sub-paragraph (3A)), and

(b)

to have reacquired those units immediately after the relevant time at their market value immediately after that time.

(3)

In the case of an election made in respect of a qualifying company, the participant in the relevant fund is deemed for the purposes of this Act—

(a)

to have sold its rights and interests in F6the relevant entity immediately before the relevant time at their market value immediately before that time F7(as adjusted, if applicable, in accordance with sub-paragraph (3A)), and

(b)

to have reacquired those rights and interests immediately after the relevant time at their market value immediately after that time.

F8(3A)

If some of the value (“the taxed value”) which is represented by the amount falls to be taken into account for the purposes of income tax or corporation tax on income, the market value mentioned in sub-paragraph (2)(a) or (3)(a) is to be reduced by so much of that market value as, on a just and reasonable basis, can be attributable to the taxed value.

(4)

In this paragraph “the UK land component” of an indirect disposal of UK land means the interests in UK land taken into account in determining whether the disposal is an indirect disposal of UK land.

F9(5)

In this paragraph “the relevant entity” means—

(a)

in a case where the relevant fund is constituted by a CoACS (within the meaning of paragraph 12), the CoACs, and

(b)

in any other case, the qualifying company.