The Authorised Investment Funds (Tax) Regulations 2006 No. 964

1. Introductory Text

2. PART 1 PRELIMINARY PROVISIONS AND INTERPRETATION

   1. Preliminary provisions

      1. 1. Citation, commencement and effect

      2. 2. Structure of these Regulations

   2. Interpretation

      1. 3. Definition of “authorised investment funds”

      2. 4. Definition of “open-ended investment company”

      3. 5. Interpretation of expressions relating to authorised unit trust schemes

      4. 6. Further definitions generally relevant for authorised investment funds

      5. 7. Umbrella companies and umbrella schemes: interpretation

      6. 8. General interpretation

      7. 9. Abbreviations and general index

3. PART 2 THE TAX TREATMENT OF AUTHORISED INVESTMENT FUNDS

   1. Loan relationships and derivative contracts: exclusion of capital profits, gains or losses

      1. 10. General rule for loan relationships: exclusion of capital profits, gains or losses

      2. 11. General rule for derivative contracts: exclusion of capital profits, gains or losses

      3. 12. Accounts prepared in accordance with UK generally accepted accounting practice

   2. Loan relationships: treatment of interest distributions and deficits

      1. 13. Treatment of interest distributions for purposes of loan relationships

      2. 14. Treatment of deficits on loan relationships

      3. 14A. Authorised investment funds with limited investment powers – stamp duty reserve tax

4. PART 2A Qualified Investor Schemes

   1. 14B. Tax treatment of qualified investor schemes

   2. 14C. The genuine diversity of ownership condition

   3. 14D. Clearance in relation to the genuine diversity of ownership condition

5. PART 3 DISTRIBUTIONS MADE BY AUTHORISED INVESTMENT FUNDS

   1. Preliminary

      1. 15. Interpretation

      2. 16. Funds excluded from the ambit of this Part

   2. Distribution accounts: general

      1. 17. Contents of distribution accounts

   3. Interest distributions

      1. 18. Interest distributions: general

      2. 19. The qualifying investments test

      3. 20. Meaning of “qualifying investments”

      4. 21. Meaning of “qualifying investments”: further provisions

   4. Dividend distributions

      1. 22. Dividend distributions: general

   5. De minimis amounts

      1. 23. Provisions applying if amounts available for distribution are de minimis

6. PART 4 THE TREATMENT OF PARTICIPANTS IN AUTHORISED INVESTMENT FUNDS

   1. CHAPTER 1 PRELIMINARY PROVISIONS

      1. 24. Structure of this Part

      2. 25. Funds excluded from the ambit of this Part

   2. CHAPTER 2 PARTICIPANTS CHARGEABLE TO INCOME TAX

      1. Deduction of tax from interest distributions: general

         1. 26. Deduction of tax where interest distributions made

      2. The reputable intermediary condition

         1. 27. The reputable intermediary condition

         2. 28. The reputable intermediary condition: further provisions

         3. 29. Consequences of reasonable but incorrect belief

      3. The residence condition

         1. 30. The residence condition

         2. 31. Residence declarations

         3. 32. References to beneficiaries in regulations 30 and 31

         4. 33. Interest distributions: the position of the legal owner

      4. The non-liability condition

         1. 34. The non-liability condition

         2. 35. Qualifying certificates

         3. 36. The contents condition

         4. 37. The supplier condition

         5. 38. The time limit condition

         6. 39. The continuing validity condition

         7. 40. The qualifying circumstances condition

         8. 41. The joint holding condition

         9. 42. Qualifying certificates valid for only part of jointly held accounts: introductory

         10. 43. Qualifying certificates valid for only part of jointly held accounts: the general rule

         11. 44. Qualifying certificates valid for only part of jointly held accounts: further provisions

         12. 45. Consequences of notice under regulation 39(6)

         13. 46. Qualifying certificate not in writing

   3. CHAPTER 3 PARTICIPANTS CHARGEABLE TO CORPORATION TAX

      1. Interest distributions

         1. 47. The obligation to deduct tax

      2. Dividend distributions

         1. 48. General

         2. 49. Calculation of unfranked part of dividend distribution

         3. 50. References to gross income

         4. 51. Participants chargeable to corporation tax: holdings in qualified investor schemes where scheme does not meet the genuine diversity of ownership condition

         5. 52. Repayments of tax

         6. 52A. Companies carrying on general insurance business: treatment of certain amounts of tax as foreign tax

   4. CHAPTER 4 CHARGE TO TAX ON SUBSTANTIAL QIS HOLDINGS IN QUALIFIED INVESTOR SCHEMES

      1. General

         1. 53. Charge to tax under this Chapter

         2. 54. Meaning of “substantial QIS holding”

         3. 55. Amount charged to tax under this Chapter

         4. 56. Measuring dates and meaning of “chargeable measuring date”

         5. 57. How tax is charged under this Chapter: income tax

         6. 58. How tax is charged under this Chapter: corporation tax

         7. 59. Further provisions

      2. The first measuring date

         1. 60. The general rule

         2. 61. Cases affected by the coming into force of these Regulations

         3. 62. Cases involving the launch of qualified investor schemes

         4. 63. Cases where a participant's holding becomes substantial

         5. 64. Definition of the “first measuring date”

         6. 65. Calculation to be made on the first measuring date

      3. Disposals of holdings

         1. 66. Reorganisations etc.

         2. 67. Disposal of part of a substantial QIS holding

         3. 68. Disposal of the whole of a substantial QIS holding

         4. 69. No gain/no loss disposals

7. PART 4A PROPERTY AIFS

   1. CHAPTER 1 PRELIMINARY PROVISIONS

      1. 69A. Property AIFs

      2. 69B. Structure of this Part

      3. 69C. Key concepts

   2. CHAPTER 2 ENTRY INTO AND MEMBERSHIP OF THE PROPERTY AIF REGIME

      1. Conditions of membership of the Property AIF regime

         1. 69D. Conditions for this Part to apply to company

         2. 69DA. Conditions for this Part to apply to a company where the company is also a qualified investor scheme

      2. The property investment business condition

         1. 69E. The property investment business condition

         2. 69F. Meaning of “property investment business”

         3. 69G. Property investment business: further provisions

         4. 69H. Meaning of “property rental business”

         5. 69I. Meaning of “intermediate holding vehicle”

      3. The genuine diversity of ownership condition

         1. 69J. The genuine diversity of ownership condition

      4. The corporate ownership condition

         1. 69K. The corporate ownership condition

         2. 69L. The corporate ownership condition: further provisions

      5. The loan creditor condition

         1. 69M. The loan creditor condition

      6. The balance of business conditions

         1. 69N. The balance of business conditions

      7. The notification condition

         1. 69O. The notification condition

         2. 69P. Form and timing of notice under regulation 69O

         3. 69Q. Contents of notice under regulation 69O

      8. Procedural matters relating to the giving of notice for this Part to apply

         1. 69R. Notice: further provisions: quashing notices

         2. 69S. Procedure relating to quashing notices

         3. 69T. Appeal against quashing notice

      9. Clearance applications

         1. 69U. Clearance in relation to the genuine diversity of ownership condition

      10. Consequences of entry

          1. 69V. Effects of entry

          2. 69W. Duration

   3. CHAPTER 3 THE TAX TREATMENT OF PROPERTY AIFS

      1. Categories of business

         1. 69X. Ring-fencing of tax-exempt business

      2. Chargeability to tax

         1. 69Y. Chargeability to corporation tax

         2. 69Z. Meaning of “net income”

         3. 69Z1. Calculation of net income of F (tax-exempt)

         4. 69Z2. Components of income arising to F (residual)

         5. 69Z3. Calculation of net income of F (residual)

      3. Breaches of conditions

         1. 69Z4. Breach of the genuine diversity of ownership condition

         2. 69Z5. Breach of the corporate ownership condition

         3. 69Z6. Breach of the loan creditor condition

         4. 69Z7. Breach of balance of business conditions

         5. 69Z8. Multiple breaches of separate conditions

      4. Further provisions

         1. 69Z9. Profit/financing costs in the case of a Property AIF that is a qualified investor scheme

         2. 69Z10. Cancellation of tax advantage

         3. 69Z11. Appeal against notice under regulation 69Z10

         4. 69Z12. Distribution to holder of excessive rights: charge to tax

         5. 69Z13. Meaning of “holder of excessive rights”

   4. CHAPTER 4 DISTRIBUTIONS MADE BY PROPERTY AIFS

      1. 69Z14. Attribution of distributions

      2. 69Z15. Property income distributions

      3. 69Z16. PAIF distributions (interest)

      4. 69Z17. PAIF distributions (dividends)

   5. CHAPTER 5 THE TREATMENT OF PARTICIPANTS IN PROPERTY AIFS

      1. Treatment of distributions: liability to tax of participants

         1. 69Z18. Property income distributions: liability to tax of participants

         2. 69Z19. PAIF distributions (interest): liability to tax of participants

         3. 69Z20. Property distributions (dividends): liability to tax of participants

         4. 69Z21. Distributions made after cessation

      2. Deduction of tax from distributions

         1. 69Z22. Deduction of tax from property income distributions

         2. 69Z23. Deduction of tax from PAIF distributions (interest)

         3. 69Z24. Distribution payments to be made without deduction of tax

         4. 69Z24A. Manufactured dividends representing property income distributions

         5. 69Z24B. Manufactured dividends representing PAIF distributions (interest)

         6. 69Z24C. Manufactured dividends – PAIF distributions (dividends)

         7. 69Z24D. Interpretation

   6. CHAPTER 6 COMPLIANCE IN RELATION TO THE PROPERTY AIF REGIME

      1. Company tax return

         1. 69Z25. Documents to be included with company tax return

      2. Breaches of conditions in Chapter 2

         1. 69Z26. Information to be provided by company to which this Part applies

      3. Holders of excessive rights

         1. 69Z27. Information relating to holders of excessive rights

      4. Information about possible breaches of conditions of membership of Property AIF regime

         1. 69Z28. Information to be provided to officers of Revenue and Customs

      5. Accounting for tax deducted from property income distributions

         1. 69Z29. Payments in an accounting period

         2. 69Z30. Collection and payment of tax

         3. 69Z31. Assessments where relevant distribution included in return

         4. 69Z32. Assessments in other cases

         5. 69Z33. Application of Income Tax Acts provisions about time limits for assessments

         6. 69Z34. Certificates of deduction of tax

         7. 69Z35. Company’s duty to deliver amended return

   7. CHAPTER 7 LEAVING THE PROPERTY AIF REGIME

      1. 69Z36. Termination by notice: company

      2. 69Z37. Termination by notice: Commissioners

      3. 69Z38. Appeal against termination notice

      4. 69Z39. Company ceasing to be authorised etc.

      5. 69Z40. Mergers

      6. 69Z41. Effects of cessation

8. PART 5 COMPLIANCE

   1. Information relating to distributions

      1. 70. Application of section 234A of ICTA

   2. Interest distributions

      1. 71. Notification of interest distributions made without deduction of tax

      2. 72. Information about interest distributions made without deduction of tax

      3. 73. Inspection of records

      4. 74. Use of information

   3. Residence declarations

      1. 75. Inspection of residence declarations

9. PART 6 FURTHER PROVISIONS RELATING TO AUTHORISED INVESTMENT FUNDS

   1. CHAPTER 1 GENERAL

      1. 76. Ownership of shares of different denominations in open-ended investment companies

      2. 77. Non-discrimination in respect of different classes of shares

   2. CHAPTER 2 AMALGAMATION OF AN AUTHORISED UNIT TRUST WITH, AND CONVERSION OF AN AUTHORISED UNIT TRUST TO, AN OPEN-ENDED INVESTMENT COMPANY

      1. 78. Circumstances in which this Chapter applies

      2. 79. Ending of accounting period of the target trust

      3. 80. Carrying forward of excess management expenses

      4. 81. Distributions by authorised unit trust after the end of its pre-transfer accounting period

      5. 82. Continuing validity of residence declarations

      6. 83. Powers of the acquiring company

      7. 84. Assessments made on discovery

      8. 85. Prevention of double relief

10. PART 7 CONSEQUENTIAL AMENDMENTS AND MODIFICATIONS OF ENACTMENTS

    1. CHAPTER 1 AMENDMENTS OF REFERENCES TO REPEALED ENACTMENTS

       1. 86. Introduction

       2. 87. Amendments of TMA 1970

       3. 88. Amendment of ICTA

       4. 89. Amendment of TCGA 1992

       5. 90. Amendment of FA 1996

       6. 91. Amendments of ITTOIA 2005

       7. 92. Amendment of the Finance Act 2005

    2. CHAPTER 2 MODIFICATIONS OF THE TAX ACTS

       1. 93. Introduction

       2. 93A. Modifications of TMA 1970

       3. 94. Modifications of ICTA

       4. 95. Modifications of FA 1996

       5. 96. Modifications of ITTOIA 2005

    3. CHAPTER 3 MODIFICATIONS OF TCGA 1992

       1. Preliminary

          1. 97. Introduction

       2. General

          1. 98. Application of TCGA 1992: general

       3. General modifications of TCGA 1992

          1. 99. General modifications: introduction

          2. 100. General modification: authorised unit trust

          3. 101. General modification: manager of authorised unit trust

          4. 102. General modification: unit in authorised unit trust

          5. 103. General modification: accumulation units in authorised unit trusts

          6. 104. General modification: holder of unit in authorised unit trust

       4. Specific modifications of TCGA 1992

          1. 105. Modification of section 99 of TCGA 1992

          2. 106. Insertion of section 99AA of TCGA 1992

          3. 107. Modification of section 170 of TCGA 1992

          4. 108. Modifications of section 272 of TCGA 1992

          5. 109. Modifications of section 288 of TCGA 1992

          6. 110. Modification of Schedule A1 to TCGA 1992

11. PART 8 FINAL PROVISIONS

    1. 111. Instruments revoked

12. Signature

13. 1. SCHEDULE

       Abbreviations and Defined Expressions

       1. PART 1 Abbreviations of Acts

       2. PART 2 Index of expressions defined or otherwise explained in these Regulations

14. Explanatory Note