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The Authorised Investment Funds (Tax) Regulations 2006

S.I. 2006/964 · Made 29 March 2006 · Extends to United Kingdom

Up to date with all changes known to legislation.gov.uk, revised to 9 December 2021.

INCOME TAX

CORPORATION TAX

CAPITAL GAINS TAX

Made 29th March 2006

Coming into force 1st April 2006

The Treasury, in exercise of the powers conferred upon them by sections 17(3) and 18 of the Finance (No. 2) Act 2005 M1 and section 152 of the Finance Act 1995 M2 make the following Regulations:

Annotations to the whole text

Marginal citations

M1

2005 c. 22.

M2

1995 c. 4; section 152 was amended by paragraph 13 of Schedule 19 to the Finance Act 1999 (c. 16) and Article 90 of S.I. 2001/3629.

Contents

  1. Part 1: PRELIMINARY PROVISIONS AND INTERPRETATION
  2. Preliminary provisions
  3. 1Citation, commencement and effect
  4. 2Structure of these Regulations
  5. Interpretation
  6. 3Definition of “authorised investment funds”
  7. 4Definition of “open-ended investment company”
  8. 5Interpretation of expressions relating to authorised unit trust schemes
  9. 6Further definitions generally relevant for authorised investment funds
  10. 7Umbrella companies and umbrella schemes: interpretation
  11. 8General interpretation
  12. 9Abbreviations and general index
  13. Part 1A: THE GENUINE DIVERSITY OF OWNERSHIP CONDITION
  14. 9AThe genuine diversity of ownership condition
  15. 9BClearance in relation to the genuine diversity of ownership condition
  16. Part 2: THE TAX TREATMENT OF AUTHORISED INVESTMENT FUNDS
  17. Loan relationships and derivative contracts: exclusion of capital profits, gains or losses
  18. 10General rule for loan relationships: exclusion of capital profits, gains or losses
  19. 11General rule for derivative contracts: exclusion of capital profits, gains or losses
  20. 12Accounts prepared in accordance with UK generally accepted accounting practice
  21. ... Interest distributions and deficits
  22. 12ADeduction of expenses
  23. 13Treatment of interest distributions for purposes of loan relationships
  24. 14Treatment of deficits on loan relationships
  25. Authorised investment funds having interests in offshore non-reporting funds
  26. 14ZAInterests in offshore non-reporting funds: general
  27. 14ZBTreatment of disposal of interest in non-reporting fund
  28. 14ZCTreatment of interest in non-reporting fund: cases where the conditions in regulation 14ZA(2) would not be satisfied
  29. 14AAuthorised investment funds with limited investment powers – stamp duty reserve tax
  30. Treatments applying to authorised investment funds with specific investment purposes
  31. 14ZDIndex tracking funds
  32. Part 2A: Qualified Investor Schemes
  33. 14BTax treatment of qualified investor schemes
  34. 14CThe genuine diversity of ownership condition Repealed
  35. 14DClearance in relation to the genuine diversity of ownership condition Repealed
  36. Part 2AA: LONG-TERM ASSET FUNDS
  37. 14DATax treatment of long-term asset funds
  38. Part 2B: DIVERSELY OWNED AIFS
  39. 14ETax treatment of diversely owned AIFs
  40. 14FMeaning of “investment transaction” Repealed
  41. 14GMeaning of relevant contracts: general Repealed
  42. 14HMeaning of relevant contract: options Repealed
  43. 14IMeaning of relevant contract: futures Repealed
  44. 14JMeaning of relevant contract: options and futures - general provisions Repealed
  45. 14KMeaning of relevant contract: contract for differences Repealed
  46. 14LLoan relationships or related transactions Repealed
  47. 14MUnits in a collective investment scheme Repealed
  48. 14NCarbon emission trading products Repealed
  49. Part 3: DISTRIBUTIONS MADE BY AUTHORISED INVESTMENT FUNDS
  50. Preliminary
  51. 15Interpretation
  52. 16Funds excluded from the ambit of this Part
  53. ...
  54. 17Allocation of income
  55. Interest distributions
  56. 18Interest distributions: general
  57. 19The qualifying investments test
  58. 20Meaning of “qualifying investments”
  59. 21Meaning of “qualifying investments”: further provisions
  60. Dividend distributions
  61. 22Dividend distributions: general
  62. De minimis amounts
  63. 23Provisions applying if amounts available for distribution are de minimis
  64. Part 4: THE TREATMENT OF PARTICIPANTS IN AUTHORISED INVESTMENT FUNDS
  65. Chapter 1: PRELIMINARY PROVISIONS
  66. 24Structure of this Part
  67. 25Funds excluded from the ambit of this Part
  68. Chapter 2: PARTICIPANTS CHARGEABLE TO INCOME TAX
  69. Deduction of tax from interest distributions: general
  70. 26Deduction of tax where interest distributions made
  71. The reputable intermediary condition
  72. 27The reputable intermediary condition
  73. 28The reputable intermediary condition: further provisions
  74. 29Consequences of reasonable but incorrect belief
  75. The residence condition
  76. 30The residence condition
  77. 31Residence declarations
  78. 32References to beneficiaries in regulations 30 and 31
  79. 33Interest distributions: the position of the legal owner
  80. 33AThe offshore marketing condition
  81. The non-liability condition
  82. 34The non-liability condition Repealed
  83. 35Qualifying certificates Repealed
  84. 36The contents condition Repealed
  85. 37The supplier condition Repealed
  86. 38The time limit condition Repealed
  87. 39The continuing validity condition Repealed
  88. 40The qualifying circumstances condition Repealed
  89. 41The joint holding condition Repealed
  90. 42Qualifying certificates valid for only part of jointly held accounts: introductory Repealed
  91. 43Qualifying certificates valid for only part of jointly held accounts: the general rule Repealed
  92. 44Qualifying certificates valid for only part of jointly held accounts: further provisions Repealed
  93. 45Consequences of notice under regulation 39(6) Repealed
  94. 46Qualifying certificate not in writing Repealed
  95. Annual payments to non-residents
  96. 46AAnnual Payments – duty to deduct income tax
  97. 46BConsequences of reasonable but incorrect belief
  98. Chapter 3: PARTICIPANTS CHARGEABLE TO CORPORATION TAX
  99. Interest distributions
  100. 47The obligation to deduct tax
  101. Dividend distributions
  102. 48General
  103. 48AIncome treated as an annual payment treated as foreign income
  104. 48BTax treated as deducted from a dividend distribution
  105. 49Calculation of unfranked part of dividend distribution
  106. 50References to gross income
  107. 51Participants chargeable to corporation tax: holdings in qualified investor schemes and long-term asset funds where scheme does not meet the genuine diversity of ownership condition
  108. 52Repayments of tax Repealed
  109. 52ACompanies carrying on general insurance business: treatment of certain amounts of tax as foreign tax Repealed
  110. 52BDiversely owned AIFs and financial traders: treatment of shares and units
  111. 52CFinancial traders: amounts to be brought into account in respect of shares or units held in diversely owned AIFs
  112. 52DShares and units not within regulation 52C
  113. 52EMeaning of financial trader
  114. Chapter 4: CHARGE TO TAX ON SUBSTANTIAL QIS HOLDINGS IN QUALIFIED INVESTOR SCHEMES
  115. General
  116. 53Charge to tax under this Chapter Repealed
  117. 54Meaning of “substantial QIS holding” Repealed
  118. 55Amount charged to tax under this Chapter Repealed
  119. 56Measuring dates and meaning of “chargeable measuring date” Repealed
  120. 57How tax is charged under this Chapter: income tax Repealed
  121. 58How tax is charged under this Chapter: corporation tax Repealed
  122. 59Further provisions Repealed
  123. The first measuring date
  124. 60The general rule Repealed
  125. 61Cases affected by the coming into force of these Regulations Repealed
  126. 62Cases involving the launch of qualified investor schemes Repealed
  127. 63Cases where a participant's holding becomes substantial Repealed
  128. 64Definition of the “first measuring date” Repealed
  129. 65Calculation to be made on the first measuring date Repealed
  130. Disposals of holdings
  131. 66Reorganisations etc. Repealed
  132. 67Disposal of part of a substantial QIS holding Repealed
  133. 68Disposal of the whole of a substantial QIS holding Repealed
  134. 69No gain/no loss disposals Repealed
  135. Part 4A: PROPERTY AIFS
  136. Chapter 1: PRELIMINARY PROVISIONS
  137. 69AProperty AIFs
  138. 69BStructure of this Part
  139. 69CKey concepts
  140. Chapter 2: ENTRY INTO AND MEMBERSHIP OF THE PROPERTY AIF REGIME
  141. Conditions of membership of the Property AIF regime
  142. 69DConditions for this Part to apply to company
  143. 69DAConditions for this Part to apply to a company where the company is also a qualified investor scheme Repealed
  144. The property investment business condition
  145. 69EThe property investment business condition
  146. 69FMeaning of “property investment business”
  147. 69GProperty investment business: further provisions
  148. 69HMeaning of “property rental business”
  149. 69IMeaning of “intermediate holding vehicle”
  150. The genuine diversity of ownership condition
  151. 69JThe genuine diversity of ownership condition Repealed
  152. The corporate ownership condition
  153. 69KThe corporate ownership condition
  154. 69LThe corporate ownership condition: further provisions
  155. The loan creditor condition
  156. 69MThe loan creditor condition
  157. The balance of business conditions
  158. 69NThe balance of business conditions
  159. The notification condition
  160. 69OThe notification condition
  161. 69PForm and timing of notice under regulation 69O
  162. 69QContents of notice under regulation 69O
  163. Procedural matters relating to the giving of notice for this Part to apply
  164. 69RNotice: further provisions: quashing notices
  165. 69SProcedure relating to quashing notices
  166. 69TAppeal against quashing notice
  167. Clearance applications
  168. 69UClearance in relation to the genuine diversity of ownership condition Repealed
  169. Consequences of entry
  170. 69VEffects of entry
  171. 69WDuration
  172. Chapter 3: THE TAX TREATMENT OF PROPERTY AIFS
  173. Categories of business
  174. 69XRing-fencing of tax-exempt business
  175. Chargeability to tax
  176. 69YChargeability to corporation tax
  177. 69ZMeaning of “net income”
  178. 69Z1Calculation of net income of F (tax-exempt)
  179. 69Z2Components of income arising to F (residual)
  180. 69Z3Calculation of net income of F (residual)
  181. Breaches of conditions
  182. 69Z4Breach of the genuine diversity of ownership condition
  183. 69Z5Breach of the corporate ownership condition
  184. 69Z6Breach of the loan creditor condition
  185. 69Z7Breach of balance of business conditions
  186. 69Z8Multiple breaches of separate conditions
  187. Further provisions
  188. 69Z9Profit/financing costs in the case of a Property AIF that is a qualified investor scheme
  189. 69Z10Cancellation of tax advantage
  190. 69Z11Appeal against notice under regulation 69Z10
  191. 69Z12Distribution to holder of excessive rights: charge to tax
  192. 69Z13Meaning of “holder of excessive rights”
  193. Chapter 4: DISTRIBUTIONS MADE BY PROPERTY AIFS
  194. 69Z14Allocation of income
  195. 69Z15Property income distributions
  196. 69Z16PAIF distributions (interest)
  197. 69Z17PAIF distributions (dividends)
  198. Chapter 5: THE TREATMENT OF PARTICIPANTS IN PROPERTY AIFS
  199. Treatment of distributions: liability to tax of participants
  200. 69Z18Property income distributions: liability to tax of participants
  201. 69Z19PAIF distributions (interest): liability to tax of participants
  202. 69Z20Property distributions (dividends): liability to tax of participants
  203. 69Z21Distributions made after cessation
  204. Deduction of tax from distributions
  205. 69Z22Deduction of tax from property income distributions
  206. 69Z23Deduction of tax from PAIF distributions (interest)
  207. 69Z24Distribution payments to be made without deduction of tax
  208. 69Z24AManufactured dividends representing property income distributions
  209. 69Z24BManufactured dividends representing PAIF distributions (interest)
  210. 69Z24CManufactured dividends – PAIF distributions (dividends)
  211. 69Z24DInterpretation
  212. Conversions and exchanges
  213. 69Z24EConversion to property AIF
  214. 69Z24FExchange of units
  215. 69Z24GFurther requirement
  216. 69Z24HApplication of section 137 of TCGA
  217. Chapter 6: COMPLIANCE IN RELATION TO THE PROPERTY AIF REGIME
  218. Company tax return
  219. 69Z25Documents to be included with company tax return
  220. Breaches of conditions in Chapter 2
  221. 69Z26Information to be provided by company to which this Part applies
  222. Holders of excessive rights
  223. 69Z27Information relating to holders of excessive rights
  224. Information about possible breaches of conditions of membership of Property AIF regime
  225. 69Z28Information to be provided to officers of Revenue and Customs
  226. Accounting for tax deducted from property income distributions
  227. 69Z29Payments in an accounting period
  228. 69Z30Collection and payment of tax
  229. 69Z31Assessments where relevant distribution included in return
  230. 69Z32Assessments in other cases
  231. 69Z33Application of Income Tax Acts provisions about time limits for assessments
  232. 69Z34Certificates of deduction of tax
  233. 69Z35Company’s duty to deliver amended return
  234. Chapter 7: LEAVING THE PROPERTY AIF REGIME
  235. 69Z36Termination by notice: company
  236. 69Z37Termination by notice: Commissioners
  237. 69Z38Appeal against termination notice
  238. 69Z39Company ceasing to be authorised etc.
  239. 69Z40Mergers
  240. 69Z41Effects of cessation
  241. Part 4B: TAX ELECTED FUNDS
  242. Chapter 1: PRELIMINARY PROVISIONS
  243. 69Z42Tax Elected Funds
  244. 69Z43Structure of this Part
  245. 69Z44Interpretation
  246. Chapter 2: ENTRY INTO AND MEMBERSHIP OF THE TAX ELECTED FUNDS REGIME
  247. Conditions of membership of the Tax Elected Funds regime
  248. 69Z45Conditions for this Part to apply to fund
  249. The TEF conditions
  250. 69Z46The property condition
  251. 69Z47The loan creditor condition
  252. 69Z48The scheme documentation condition
  253. Application for this Part to apply
  254. 69Z49Application process
  255. 69Z50Form and timing of application under regulation 69Z49
  256. 69Z51Contents of application under regulation 69Z49
  257. Procedural matters relating to the making of applications for this Part to apply
  258. 69Z52Refusing an application: refusal notice
  259. 69Z53Appeal against refusal notice
  260. Consequences of entry
  261. 69Z54Effects of entry
  262. 69Z55Duration
  263. Chapter 3: THE TAX TREATMENT OF TAX ELECTED FUNDS
  264. 69Z56Components of income
  265. 69Z57Treatment of property investment income
  266. 69Z58Treatment of distributions
  267. Chapter 4: DISTRIBUTIONS MADE BY TAX ELECTED FUNDS
  268. 69Z59Allocation of income
  269. 69Z60TEF distributions (dividends)
  270. 69Z61TEF distributions (non-dividend)
  271. Chapter 5: THE TREATMENT OF PARTICIPANTS IN TAX ELECTED FUNDS
  272. TEF distribution (dividend)
  273. 69Z62Participants chargeable to corporation tax
  274. TEF distributions (non-dividend)
  275. 69Z63Obligation to deduct tax from TEF distributions (non-dividend)
  276. 69Z64Modification of section 490 of CTA 2009
  277. Chapter 6: COMPLIANCE IN RELATION TO THE TAX ELECTED FUNDS REGIME
  278. Breaches of TEF conditions
  279. 69Z65Breach of conditions: general
  280. 69Z66Breach of the property condition, genuine diversity of ownership condition or scheme documentation condition
  281. 69Z67Breach of the loan creditor condition
  282. 69Z68Multiple breaches of separate conditions
  283. Information about possible breaches of the TEF conditions
  284. 69Z69Information to be provided to officers of Revenue and Customs
  285. Chapter 7: LEAVING THE TAX ELECTED FUNDS REGIME
  286. 69Z70Termination by election: authorised investment fund
  287. 69Z71Termination by notice: Commissioners
  288. 69Z72Appeal against termination notice
  289. 69Z73Mergers
  290. Part 5: COMPLIANCE
  291. Information relating to distributions
  292. 70Application of section 234A of ICTA
  293. Interest distributions and TEF distributions (non-dividend)
  294. 71Notification of interest distributions and TEF distributions (non-dividend) made without deduction of tax
  295. 72Information about interest distributions and TEF distributions (non-dividend) made without deduction of tax
  296. 73Inspection of records
  297. 74Use of information
  298. Residence declarations
  299. 75Inspection of residence declarations
  300. Part 6: FURTHER PROVISIONS RELATING TO AUTHORISED INVESTMENT FUNDS
  301. Chapter 1: GENERAL
  302. 76Ownership of shares of different denominations in open-ended investment companies
  303. 77Non-discrimination in respect of different classes of shares
  304. Chapter 2: AMALGAMATION OF AN AUTHORISED UNIT TRUST WITH, AND CONVERSION OF AN AUTHORISED UNIT TRUST TO, AN OPEN-ENDED INVESTMENT COMPANY
  305. 78Circumstances in which this Chapter applies
  306. 79Ending of accounting period of the target trust
  307. 80Carrying forward of excess management expenses
  308. 81Distributions by authorised unit trust after the end of its pre-transfer accounting period
  309. 82Continuing validity of residence declarations
  310. 83Powers of the acquiring company
  311. 84Assessments made on discovery
  312. 85Prevention of double relief
  313. Part 6A: FUNDS INVESTING IN NON-REPORTING OFFSHORE FUNDS
  314. Chapter 1: Preliminary Provisions
  315. 85AFINROFs
  316. 85BStructure of this Part
  317. 85CInterpretation
  318. 85DThe investment condition
  319. 85EInterests in funds treated as not being interests in non-reporting funds
  320. 85FElective FINROFs
  321. Chapter 2: Entry into Funds Investing in Non-Reporting Offshore Fund (“FINROF”) regime
  322. 85GEntry into FINROF regime: the basic rule
  323. 85HThe requirement to notify where regulation 85D is satisfied
  324. 85IThe requirement to notify participants when a fund enters the FINROF regime
  325. 85JInadvertent fulfilment of investment condition
  326. 85KAppeal against refusal to provide written notice
  327. 85LDisposal of an interest in an authorised investment fund prior to its becoming a FINROF
  328. Chapter 3: Tax treatment of FINROFs and of participants in FINROFs
  329. The charge to tax
  330. 85MThe charge to tax: general provisions
  331. 85NThe charge to tax: further provisions
  332. 85OApplication of certain provisions of TCGA 1992
  333. 85PApplication of section 10A of TCGA 1992
  334. Chapter 4: Exceptions, etc from the charge to tax
  335. 85QExceptions from the charge to tax
  336. 85RTrading stock etc.
  337. 85SLong-term insurance funds of insurance companies
  338. 85TCharitable companies and charitable trusts
  339. Chapter 5: Disposal of units in FINROFs
  340. 85UApplication of this Chapter
  341. 85VDisposal of an asset: the basic rule
  342. 85WProvisions applicable on death
  343. 85XApplication of section 135 of TCGA 1992
  344. 85YApplication of section 136 of TCGA 1992
  345. Chapter 6: Income gains and computation of income gains
  346. 85ZGeneral provisions
  347. 85Z1The basic gain and its computation
  348. 85Z2Earlier disposal to which the no gain/no loss basis applies
  349. 85Z3Modifications of TCGA 1992
  350. 85Z4Losses
  351. Chapter 7: Deduction of income gains in computing chargeable gains
  352. 85Z5Scope of this Chapter
  353. 85Z6Treatment of the TCGA disposal: general rules
  354. 85Z7Modification of section 162 TCGA 1992
  355. 85Z8Application of section 128 of TCGA 1992
  356. Chapter 8: Leaving the FINROF regime
  357. 85Z9Leaving the FINROF regime
  358. 85Z10Requirement to notify participants when a fund leaves the FINROF regime
  359. 85Z11Participant’s power to elect for deemed disposal
  360. Part 7: CONSEQUENTIAL AMENDMENTS AND MODIFICATIONS OF ENACTMENTS
  361. Chapter 1: AMENDMENTS OF REFERENCES TO REPEALED ENACTMENTS
  362. 86Introduction
  363. 87Amendments of TMA 1970
  364. 88Amendment of ICTA Repealed
  365. 89Amendment of TCGA 1992
  366. 90Amendment of FA 1996
  367. 91Amendments of ITTOIA 2005
  368. 92Amendment of the Finance Act 2005
  369. Chapter 2: MODIFICATIONS OF THE TAX ACTS
  370. 93Introduction
  371. 93AModifications of TMA 1970
  372. 94Modifications of ICTA
  373. 95Modifications of FA 1996
  374. 96Modifications of ITTOIA 2005
  375. 96AModification of CTA 2009
  376. Chapter 3: MODIFICATIONS OF TCGA 1992
  377. Preliminary
  378. 97Introduction
  379. General
  380. 98Application of TCGA 1992: general
  381. General modifications of TCGA 1992
  382. 99General modifications: introduction
  383. 100General modification: authorised unit trust
  384. 101General modification: manager of authorised unit trust
  385. 102General modification: unit in authorised unit trust
  386. 103General modification: accumulation units in authorised unit trusts
  387. 104General modification: holder of unit in authorised unit trust
  388. Specific modifications of TCGA 1992
  389. 105Modification of section 99 of TCGA 1992
  390. 106Insertion of section 99AA of TCGA 1992 Repealed
  391. 107Modification of section 170 of TCGA 1992
  392. 108Modifications of section 272 of TCGA 1992
  393. 109Modifications of section 288 of TCGA 1992
  394. 110Modification of Schedule A1 to TCGA 1992
  395. Part 8: FINAL PROVISIONS
  396. 111Instruments revoked
  397. Signature
  398. Schedule: Abbreviations and Defined Expressions
  399. 1Abbreviations of Acts
  400. 2Index of expressions defined or otherwise explained in these Regulations
  401. Explanatory note