The Community Investment Tax Relief (Accreditation of Community Development Finance Institutions) (Amendment) Regulations 2008

Insertion of regulations 15A to 15E

8.  After regulation 15 insert—

“Applications relating to failures to satisfy the conditions of regulation 8

15A.— (1) This regulation applies where after the end of a year ending upon the anniversary of the date that the CDFI was first granted accreditation a CDFI becomes aware of a failure to satisfy the conditions of regulation 8 in respect of that year.

(2) Where this regulation applies, the CDFI may apply in writing to the Secretary of State within 3 months after the end of that year for a determination that the accreditation shall not be withdrawn notwithstanding the failure to satisfy the conditions of regulation 8.

(3) An application under this regulation must specify—

(a) the circumstances that have led to the failure to satisfy the conditions of regulation 8, and

(b) the measures taken by the CDFI to avoid the failure.

(4) Where the failure relates to a condition specified in regulation 8(1)(a), (b) or (c), the application must state—

(a) the maximum percentage of the investment fund that was suitably invested during that year, and

(b) the maximum percentage that would have been so invested had it not been for the circumstances that led to the failure.

(5) Where the failure relates to the condition specified in regulation 8(1)(d), the application must state—

(a) the average percentage of the investment fund suitably invested as calculated in accordance with regulation 8(2), and

(b) the average percentage of the investment fund that would have been suitably invested as calculated in accordance with regulation 8(2) had it not been for the circumstances that led to the failure.

Applications relating to anticipated failures to satisfy conditions of regulation 8

15B.— (1) This regulation applies where during a year ending upon the anniversary of the date a CDFI was first granted accreditation the CDFI anticipates likely failure to satisfy the conditions of regulation 8 in respect of that year.

(2) Where this regulation applies the CDFI may apply in writing to the Secretary of State for a decision that, should the anticipated likely failure occur at the end of the year as a result of the circumstances specified in the application, the Secretary of State will determine after the end of the year in respect of which the application relates, that accreditation will not be withdrawn.

(3) An application under this regulation must specify—

(a) the circumstances that are anticipated will lead to the failure to satisfy the conditions of regulation 8, and

(b) any measures that have been taken or that will be taken by the CDFI in that year—

(i) to avoid that failure, and

(ii) to ensure that the maximum amount of the investment fund that is possible in all the circumstances will be suitably invested.

(4) Where the failure relates to a condition specified in regulation 8(1)(a), (b), or (c) the application must state—

(a) the maximum percentage of the investment fund suitably invested at the time the application under this regulation is submitted to the Secretary of State,

(b) the maximum percentage of the investment fund that would have been so invested had it not been for the circumstances that are anticipated to lead to the failure, and

(c) as far as possible, the maximum possible percentage of the investment fund that the CDFI anticipates will be so invested as a result of the measures taken under paragraph (3)(b).

(5) Where the anticipated failure relates to a condition specified in regulation 8(1)(d), the application must state—

(a) the average percentage of the investment fund suitably invested as calculated in accordance with regulation 8(2)(a) for each day of that year before the day on which the application is submitted to the Secretary of State, and

(b) as far as possible the average percentage of the investment fund that will be suitably invested on the final day of that year as calculated in accordance with regulation 8(2) (a) or (b) further to the measures taken under paragraph (3)(b).

(6) Where a CDFI submits an application under this regulation further to which the Secretary of State decides under regulation 15D that after the end of the year to which the application relates accreditation will not be withdrawn and the CDFI thereafter anticipates that it will fail—

(a) to take the measures as specified in the application, or

(b) to ensure that the maximum or average amount of the investment fund as specified in the application will be suitably invested,

it may make a further application under this paragraph (2) in respect of that anticipated failure and this regulation will apply to that failure as it would apply to an application in respect of an anticipated failure to satisfy the conditions of regulation 8.

Applications under regulation 15A: failures that have occurred

15C.— (1) This regulation applies where an application under regulation 15A has been made in respect of a failure to meet the conditions of regulation 8.

(2) Where the Secretary of State is satisfied that—

(a) the failure to satisfy the conditions of regulation 8 was as a result of the circumstances specified in the application,

(b) those circumstances were outside the control of the CDFI and, where applicable, any person connected with it, and

(c) the CDFI acted reasonably in its attempts to avoid failing to satisfy the conditions of regulation 8 and to minimise the extent of failure,

the Secretary of State must determine that accreditation shall not be withdrawn and shall notify the CDFI of the determination.

(3) Where the Secretary of State does not have sufficient information to make a determination under this regulation he may ask the CDFI to supply further information prior to making a determination.

Applications under regulation 15B: anticipated failures

15D.— (1) This regulation applies where an application under regulation 15B has been made in respect of an anticipated failure to meet the conditions of regulation 8.

(2) Where the Secretary of State is satisfied that—

(a) the anticipated failure to satisfy the conditions of regulation 8 arises from the circumstances specified in the application,

(b) those circumstances are outside the control of the CDFI and, where applicable, any person connected with it, and

(c) the measures specified in the application that have been taken or that will be taken to prevent failure or to minimise the extent of failure are reasonable in all the circumstances,

he must, subject to paragraphs (4) and (5), decide that where such measures as are specified in the application are taken by the CDFI but the CDFI thereafter fails to meet the conditions of regulation 8 as a result of the circumstances specified in the application the accreditation shall not be withdrawn after the end of that year if failure occurs as a result of those circumstances.

(3) The Secretary of State must notify the CDFI of his decision made under paragraph (2).

(4) Where the Secretary of State does not have sufficient information to make a decision under this regulation he may request the CDFI to provide more information prior to making a decision.

(5) Where the Secretary of State decides under paragraph (2) that accreditation will not be withdrawn after the end of the year to which the application relates and the CDFI—

(a) becomes aware that the measures specified in the application will not prevent the failure or minimise the extent of failure, or

(b) becomes unable to implement such measures,

the CDFI may submit a further application under regulation 15B in respect of the same circumstances specifying further measures that will be taken to avoid or minimise the extent of failure.

(6) Where the Secretary of State notifies the CDFI under paragraph (3) that accreditation may be withdrawn the CDFI may submit a further application under regulation 15B.

Regulations 15A to 15D: supplementary

15E.— (1) Where a CDFI has submitted an application under regulation 15B but the Secretary of State does not make a decision under regulation 15D before the end of the year in question and the CDFI thereafter fails to satisfy the conditions of regulation 8 for that year it must submit an application under regulation 15A.

(2) Where the Secretary of State has received one or more applications under regulation 15B upon which no decision has yet been made, the Secretary of State must not make a decision that accreditation will not be withdrawn until he is satisfied that it should not be withdrawn in respect of each and every application.

(3) A determination under regulation 15C not to withdraw accreditation and a decision under regulation 15D that accreditation may not be withdrawn shall not prevent the Secretary of State from withdrawing accreditation where he has grounds for doing so as a result of other circumstances which are not the subject of an application under regulation 15A or 15B.

(4) For the purposes of regulations 15A and 15B “suitably invested” means invested in relevant investments in qualifying enterprises.

(5) For the purposes of regulations 15C and 15D—

(a) a person who acts on behalf of a CDFI to manage its investment is treated as a CDFI, and

(b) section 993 of the Income Tax Act 2007 shall apply for determining whether a person is connected with a CDFI.”