Paragraph 6 F1

(1)

Where PAIF seeding relief has been allowed in respect of a transaction, and the portfolio test is not met immediately before the end of the seeding period, the relief is withdrawn and tax is chargeable in accordance with sub-paragraph (2).

See sub-paragraph (7) for the meaning of “portfolio test”.

(2)

The amount chargeable is the amount that would have been chargeable in respect of the transaction but for PAIF seeding relief.

(3)

Where PAIF seeding relief has been allowed in respect of a transaction (“the relevant transaction”), and the portfolio test is met immediately before the end of the seeding period, but is not met—

(a)

at a time in the control period, or

(b)

at a time after the end of the control period, where the failure is pursuant to or in connection with arrangements made before the end of that period,

then, subject to sub-paragraph (4), the relief, or an appropriate proportion of it, is withdrawn, and tax is chargeable in accordance with sub-paragraph (5).

(4)

The requirement to meet the portfolio test at a time mentioned in sub-paragraph (3)(a) or (b) applies only to times when the property AIF holds—

(a)

the chargeable interest that was acquired by the property AIF under the relevant transaction, or

(b)

a chargeable interest that is derived from that interest.

(5)

The amount chargeable is the amount that would have been chargeable in respect of the relevant transaction but for PAIF seeding relief or, as the case may be, an appropriate proportion of the tax that would have been so chargeable.

(6)

In sub-paragraphs (3) and (5) an “appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held by the property AIF at the time when the portfolio test is not met.

(7)

The portfolio test is a requirement that the property AIF meets—

(a)

the non-residential portfolio test (see sub-paragraph (8)), or

(b)

the residential portfolio test (see sub-paragraph (9)).

(8)

The “non-residential portfolio test” is met at any time if—

(a)

the property AIF holds at least 10 seeded interests at that time,

(b)

so much of the total chargeable consideration as is attributable to all the seeded interests held by the property AIF at that time (“the seeded portfolio”) is at least £100 million, and

(c)

so much of the total chargeable consideration as is attributable to so many of those seeded interests as are interests in or over residential property (if any) does not exceed 10% of the seeded portfolio.

(9)

The “residential portfolio test” is met at any time if—

(a)

so much of the total chargeable consideration as is attributable to all the seeded interests held by the property AIF at that time is at least £100 million, and

(b)

at least 100 of the seeded interests held by the property AIF at that time are interests in or over residential property.

(10)

In sub-paragraphs (8) and (9)—

“seeded interest” means a chargeable interest acquired by the property AIF in a transaction for which PAIF seeding relief is allowed (whether or not relief is subsequently withdrawn to any extent) (a “seeding transaction”), and
“total chargeable consideration” means the total of the chargeable consideration for all seeding transactions.

(11)

For the purposes of this paragraph, section 116(7) does not apply (modification of what counts as residential property).

Annotations

Textual amendments

F1: Sch. 7A inserted (with effect in accordance with Sch. 16 para. 15 of the amending Act) by Finance Act 2016 (c. 24), Sch. 16 para. 4

Notes on Schedule 7A

Textual amendments

F2: Sch. 7A heading substituted (19.3.2025) by The Co-ownership Contractual Schemes (Tax) Regulations 2025 (S.I. 2025/200), regs. 1(2), 59(2) (with reg. 63)