The Authorised Investment Funds (Tax) (Amendment) Regulations 2009
| Jurisdiction | UK Non-devolved |
| Citation | SI 2009/2036 |
| Year | 2009 |
2009 No. 2036
Income Tax
Corporation Tax
Capital Gains Tax
The Authorised Investment Funds (Tax) (Amendment) Regulations 2009
Made 21th July 2009
Laid before the House of Commons 23th July 2009
Coming into force 1st September 2009
The Treasury make the following Regulations in exercise of the powers conferred by sections 17(3) and 18 of the Finance (No. 2) Act 20051and sections 973 and 974 of the Income Tax Act 20072.
Citation and commencement
1. These Regulations may be cited as the Authorised Investment Funds (Tax) (Amendment) Regulations 2009 and shall come into force on 1st September 2009.
Amendment of the Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964)
2. The Authorised Investment Funds (Tax) Regulations 20063are amended as follows.
Amendment of regulation 2
3. In regulation 2 (structure of these Regulations)4—
(a) after “interpretation;” insert—
“Part 1A deals with the genuine diversity of ownership condition;”,
(b) after “Part 2A deals with qualified investor schemes” insert—
“Part 2B deals with diversely owned AIFs;”,
(c) after “Part 4A deals with Property AIFs;” insert—
“Part 4B deals with Tax Elected Funds;”.
Amendment of regulation 6
4. In regulation 6 (further definitions generally relevant for authorised investment funds) after paragraph (6) insert—
“7 In these Regulations “instrument constituting the fund” means—
(a) in relation to an open-ended investment company, the instrument of incorporation, and
(b) in relation to an authorised unit trust scheme, the trust deed.
8 In these Regulations “genuine diversity of ownership condition” has the meaning given by regulation 9A.”.
Amendment of regulation 8
5. In regulation 8 (general interpretation) insert at the appropriate place—
““connected person” has the meaning given in—
(a) sections 993 and 994 of ITA 2007 (connected persons)5in the case of a person chargeable to income tax, and
(b) section 839 of ICTA (connected persons)6in the case of a person chargeable to corporation tax;”.
Insertion of Part 1A
6. After regulation 9 (abbreviations and general index) insert the following Part—
“PART 1A
THE GENUINE DIVERSITY OF OWNERSHIP CONDITION
The genuine diversity of ownership condition
9A.—(1) For the purposes of these Regulations, the genuine diversity of ownership condition is as follows.
(2) The genuine diversity of ownership condition is that an authorised investment fund must—
(a)
(a) meet conditions A to C throughout the accounting period; or
(b)
(b) comply with paragraph (8).
(3) Condition A is that the fund documents—
(a)
(a) contain a statement that units in the fund will be widely available,
(b)
(b) specify the intended categories of investor, and
(c)
(c) specify that the manager of the fund must market and make available the units in the fund in accordance with paragraph 9A(6)(a).
(4) Condition B is that neither—
(a)
(a) the specification of the intended categories of investor, nor
(b)
(b) any other terms or conditions governing participation in the fund, whether or not specified in the fund documents,
have a limiting or deterring effect.
(5) In paragraph (4) a limiting or deterring effect means an effect which—
(a)
(a) limits investors to a limited number of specific persons or specific groups of connected persons, or
(b)
(b) deters a reasonable investor within the intended categories of investor from investing in the fund.
(6) Condition C is that—
(a)
(a) units in the fund must be marketed and made available—
(i) sufficiently widely to reach the intended categories of investors, and
(ii) in a manner appropriate to attract those categories of investors; and
(b)
(b) a person who is in an intended category of investor can, upon request to the manager of the fund, obtain information about that fund and acquire units in it.
Condition C is subject to paragraph (7).
(7) Condition C shall be treated as being met even if at the relevant time the fund has no capacity to receive additional investments, unless—
(a)
(a) the capacity of the fund to receive investments in it is fixed by the fund documents (or otherwise), and
(b)
(b) a pre-determined number of specific persons or specific groups of connected persons make investments in the fund which collectively exhausts all, or substantially all, of that capacity.
(8) An authorised investment fund which is a Property AIF also meets the genuine diversity of ownership condition if—
(a)
(a) an investor in the fund is a unit trust scheme (a “feeder fund”);
(b)
(b) conditions A to C are met in relation to the authorised investment fund after taking into account—
(i) the fund documents relating to the feeder fund, and
(ii) the intended investors in the feeder fund; and
(c)
(c) the authorised investment fund and the feeder fund have the same manager (or proposed manager).
(9) In this Part “fund documents” means—
(a)
(a) the instrument constituting the fund, and
(b)
(b) the fund’s prospectus in issue for the time being (including any supplements to the prospectus).
Clearance in relation to the genuine diversity of ownership condition
9B.—(1) An application for clearance that an authorised investment fund meets the genuine diversity of ownership condition (see regulation 9A) may be made in writing to the Commissioners by the manager (or proposed manager) of an authorised investment fund.
(2) An application for clearance must be accompanied by the fund documents in the form in which it is proposed that those documents will apply at the beginning of the first accounting period of the fund for which clearance is sought.
(3) If regulation 9A(2)(b) and (8) applies, an application for clearance by the authorised investment fund must be accompanied by—
(a)
(a) the documents specified in paragraph (2), and
(b)
(b) the fund documents of the feeder fund in the form in which it is proposed that those documents will apply at the beginning of the first accounting period of the fund for which clearance is sought.
(4) The Commissioners may require the manager (or proposed manager) to provide further particulars if they believe that full particulars of the fund have not been provided.
(5) The Commissioners must notify the applicant within 28 days of the receipt of the particulars (or, if paragraph (4) applies, of all further particulars required) that they—
(a)
(a) give clearance that the fund meets the genuine diversity of ownership condition,
(b)
(b) give that clearance subject to conditions, or
(c)
(c) refuse to give that clearance.
(6) An authorised investment fund (and investors in that fund) may not rely on a clearance given under this regulation if—
(a)
(a) at the beginning of the first accounting period of the fund to which the clearance relates (and at the beginning of each subsequent accounting period), a relevant statement in the fund documents in issue for the time being is not in accordance with a relevant statement in the documents considered by the Commissioners before giving clearance,
(b)
(b) the fund acts or is operated in contravention of a relevant statement in the fund documents,
(c)
(c) the fund documents are materially amended, or
(d)
(d) the fund is operated otherwise than in accordance with condition C of the genuine diversity of ownership condition (see regulation 9A(6)).
(7) If regulation 9A(2)(b) and (8) applies an authorised investment fund (and investors in that fund) may not rely on a clearance given under this regulation if any of sub-paragraphs (a) to (d) of paragraph (6) apply in relation to either the authorised investment fund or the feeder fund.
(8) Paragraph (6)(c) does not apply if the manager of the fund has obtained a clearance given under this regulation which applies to the amendment.
(9) For the purposes of paragraph (6)(c), a material amendment is one that may reasonably be construed as causing, or likely to cause, the fund to fail to meet the genuine diversity of ownership condition in relation to any accounting period.”.
Amendment of regulation 13
7. In regulation 13 (treatment of interest distributions for purposes of loan relationships) after paragraph (3) insert—
“4 In this regulation an “interest distribution” includes a TEF distribution (non-dividend) (see regulation 69Z61(3)).”.
Amendment of regulation 14B
8. Regulation 14B (tax treatment of qualified investor schemes)7is amended as follows.
(1) In paragraph (1) for “14C” substitute “9A”.
(2) In paragraph (2) after sub-paragraph (a) insert—
“(aa)
“(aa) the provisions of Part 4 of these Regulations,”.
(3) Omit paragraph (5).
Omission of regulations 14C and 14D
9. Omit regulations 14C (the genuine diversity of ownership condition) and 14D (clearance in relation to the genuine diversity of ownership condition)8.
Insertion of Part 2B
10. After regulation 14B (tax treatment of qualified investor schemes) insert the following Part—
“PART 2B
DIVERSELY OWNED AIFS
Tax treatment of diversely owned AIFs
14E.—(1) This regulation applies to an authorised investment fund in respect of an accounting period if—
(a)
(a) the fund carries out an investment transaction in that period, and
(b)
(b) the fund meets the genuine diversity of ownership condition in relation to that period.
(2) In these Regulations an authorised investment fund to which this regulation applies is referred to as a “diversely owned AIF”.
(3) If the profits or losses, as the case may be, arising from an investment transaction are capital profits, gains or losses, that investment transaction shall be treated as a non-trading transaction of the diversely owned AIF for the purposes of corporation tax.
(4) Chapter 2 of Part 3 of CTA 2009 (income taxed as trade...
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