SCHEDULE 10 Loan relationships: collective investment schemes
Company holdings in unit trusts and offshore funds
4
(1)
This paragraph applies for the purposes of corporation tax in relation to any company where—
(a)
at any time in an accounting period that company holds any of the following (“a relevant holding”), that is to say, any rights under a unit trust scheme or any relevant interests in an offshore fund; and
(b)
there is a time in that period when that scheme or fund fails to satisfy the non-qualifying investments test.
(2)
The Corporation Tax Acts shall have effect for that accounting period in accordance with sub-paragraphs (3) and (4) below as if the relevant holding were rights under a creditor relationship of the company.
F1(3)
The debits and credits to be brought into account for the purposes of this Chapter as respects the company’s relevant holdings must be determined on the basis of fair value accounting.
(4)
F2Sub-paragraph (3) shall not be taken, as respects any accounting period, to require the bringing into account of any credit relating to any distributions of an authorised unit trust which become due and payable in that period other than interest distributions within the meaning of F3regulations made under section 17(3) of the Finance (No. 2) Act 2005 (as at 1st April 2006, see regulation 18(3) of the Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964)).