SCHEDULES
F1SCHEDULE 5AAAUK property rich collective investment vehicles etc
PART 3Election for transparency
Election for collective investment vehicle to be treated as partnership
8
1
This paragraph applies to an offshore collective investment vehicle—
a
which is UK property rich, and
b
which is transparent for income tax purposes otherwise than as a result of being constituted by two or more persons carrying on a trade or business in partnership.
2
The manager of the vehicle may make an election for the vehicle to be treated for the purposes of—
a
this Act, and
b
the Management Act, and any other provision of the Corporation Tax Acts, so far as relating to the taxation of chargeable gains,
as if, in relation to all times on and after its constitution, it were to be regarded as a partnership.
3
Accordingly, as a result of sub-paragraph (2)(b), it follows that, in applying rules such as section 1154 of CTA 2010 (meaning of “75% subsidiary” etc) for the purposes of Part 12 of that Act (Real Estate Investment Trusts) so far as relating to the taxation of chargeable gains, the vehicle is to be regarded as a partnership.
F24
Section 12AA of the Management Act applies as a result of sub-paragraph (2) but as if —
a
subsection (1) of that section authorised the giving of a notice under subsection (2) or (3) for the purpose of facilitating the amount in which each partner is chargeable to tax on chargeable gains,
b
that section authorised the giving of the notice to the manager of the vehicle, and
c
that section authorised a single notice under subsection (2) or (3) of that section requiring the making and delivery, in accordance with the notice, of a return every year (whether or not any partnership property has been disposed of in the period to which the return relates).
5
The election has effect whether or not the vehicle would, but for the making of the election, be regarded as a person chargeable to capital gains tax or corporation tax on chargeable gains.
6
For the purposes of this paragraph whether or not an offshore collective investment vehicle is regarded as being UK property rich may be determined by reference to the prospectus for the vehicle on the assumption that investments are made by the vehicle in accordance with the prospectus.
7
For the purposes of this paragraph a collective investment vehicle is “transparent for income tax purposes” if, on the assumption that there are participants who are individuals resident in the United Kingdom, any sums which form part of the income of the vehicle—
a
would be chargeable to income tax on those assumed participants under a provision specified in section 830(2) of ITTOIA 2005 in respect of such of those sums as would be referable to their interests, or
b
if any of that income is derived from assets within the United Kingdom, would be so chargeable had the assets been outside the United Kingdom.
8
If an election is made under this paragraph in relation to a collective investment vehicle—
a
section 99 (application of Act to unit trust schemes) does not apply in relation to the vehicle, and
b
section 103D (tax transparent funds) does not apply in relation to the vehicle.
Further provision about election
9
1
An election under paragraph 8 in relation to an offshore collective investment vehicle—
a
has effect only if the participants in the vehicle at the time at which it is made have consented to the making of the election,
b
must be made by notice given to an officer of Revenue and Customs, and
c
must be made before the end of the period of 12 months beginning with the relevant acquisition date.
2
For this purpose “the relevant acquisition date” means the earliest date on which—
a
an interest in UK land, or
b
a right or interest in a company that is UK property rich,
forms part of the property that is the subject of or held by the vehicle.
3
An election under paragraph 8 is irrevocable.
F34
An election under paragraph 8 must include the following information in the case of each participant in the vehicle—
a
the participant’s name and, if the participant has one, the participant’s unique taxpayer reference,
b
the participant’s usual or last known place of residence or the participant’s place of business, and
c
in the case of a participant who is an individual, the participant’s date of birth.
Units in CIVs held by life insurance companies
10
1
This paragraph applies if an election under paragraph 8 has effect in relation to an offshore collective investment vehicle.
2
The election is treated as having no effect for the purposes of this Act in relation to any units in the vehicle which are held by an insurance company for the purposes of its long-term business.
Relationship to re-basing rules under Schedule 4AA for non-UK residents
11
1
This paragraph applies if—
a
an election under paragraph 8 has effect in relation to an offshore collective investment vehicle, and
b
as a result of the election, Part 3 or 4 of Schedule 4AA would (but for this paragraph) apply in relation to a disposal made by a participant in the vehicle.
2
The disposal is to be regarded for the purposes of Schedule 4AA as if it were one to which Part 2 of that Schedule applies.
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