Regulation 69Z9 Profit/financing costs in the case of a Property AIF that is a qualified investor schemeF1

This regulation applies if conditions A and B are met.

Condition A is that an open-ended investment company to which this Part applies is a qualified investor scheme.

Condition B is that the result of the following calculation is less than 1.25 in respect of an accounting period—

In paragraph (3)—

• “Income” means the amount of the net income of F (tax-exempt) arising in the accounting period (before the offset of capital allowances, of losses from a previous accounting period, and of amounts taken into account under regulation 69Z1(3)), and

• “Financing Costs” means the amount of the financing costs incurred in that period in respect of the business of F (tax-exempt).

An amount shall be charged to corporation tax.

That amount is determined as follows—

• Step One

  Determine the financing costs which, given the actual income, would produce the result of 1.25 in the calculation specified in paragraph (3) (the “theoretical financing costs”).

• Step Two

  Determine the amount by which the actual financing costs exceed the theoretical financing costs (“the excess financing cost”).

• Step Three

  Divide the main rate at which corporation tax is charged for the accounting period by the rate at which corporation tax is charged on an open-ended investment company for the accounting period (see section 468A(1) of ICTA) to determine the multiplier.

• Step Four

  Multiply the excess financing cost by the multiplier.

The result is the amount charged to tax.

For the purposes of paragraphs (3) and (4) “financing costs” are the costs of debt finance; and in calculating the costs of debt finance in respect of an accounting period the matters to be taken into account include—

No loss, deficit, expense or allowance may be set off against the amount charged to tax by paragraph (5).