The Authorised Investment Funds (Tax) (Amendment) Regulations 2009

Regulation 22 amends regulation 69Z8 of the principal Regulations to reflect that the GDO condition, which is a condition that has to be satisfied in order for Part 4A to apply to an open-ended investment company is now contained in regulation 9A of the principal Regulations.

Regulation 23 substitutes regulation 69Z34 (certificates of deduction of tax) of the principal Regulations to provide for information relating to the deduction of tax to be provided in a written statement or electronically.

Regulation 24 inserts the new Part 4B dealing with a certain type of authorised investment fund (“Tax Elected Funds”) into the principal Regulations. Part 4B comprises regulations 69Z42 to 69Z71 of the principal Regulations and is divided into seven Chapters.

Chapter 1 of Part 4B contains preliminary provisions. Regulation 69Z42 is of an introductory nature; regulation 69Z43 sets out the structure of Part 4B; and regulation 69Z44 defines two key concepts.

Chapter 2 of Part 4B is concerned with entry into the Tax Elected Funds regime. Regulation 69Z45 specifies the conditions which an authorised investment fund must meet in order for Part 4B to apply to it in respect of an accounting period. The conditions are the property condition (dealt with in regulation 69Z46); the loan creditor condition (dealt with in regulation 69Z47); and the scheme documentation condition (dealt with in regulation 69Z48). Regulations 69Z49 to 69Z53 deal with procedural matters arising in connection with an application for Part 4B to apply. Regulations 69Z54 and 69Z55 are concerned with the consequences of entry into the Tax Elected Funds regime.

Chapter 3 of Part 4B is concerned with the tax treatment of Tax Elected Funds. Regulation 69Z56 provides for the components of income of a Tax Elected Fund. Regulation 69Z57 provides for the treatment of property investment income. Regulation 69Z58 provides for the treatment of distributions.

Chapter 4 of Part 4B is concerned with distributions made by Tax Elected Funds. Regulation 69Z59 provides for the total amount shown in the distribution accounts of a Tax Elected Fund to be attributed in two different ways; and regulations 69Z60 and 69Z61 are concerned with the tax implications of the different attributions.

Chapter 5 of Part 4B is concerned with the treatment of participants in Tax Elected Funds. Regulation 69Z62 makes provision relating to participants chargeable to corporation tax. Regulation 69Z63 is concerned with the obligation to deduct tax from a distribution to participants. Regulation 69Z64 makes a consequential modification to the Corporation Tax Act 2009.

Chapter 6 of Part 4B is concerned with compliance. Regulations 69Z65 to 69Z68 deal with the consequences where conditions for membership of the Tax Elected Funds regime are breached. Regulation 69Z69 provides for information to be provided to an officer of Revenue and Customs.

Chapter 7 of Part 4B is concerned with leaving the Tax Elected Funds regime. Regulations 69Z70 to 69Z73 provide for Part 4B to cease to apply to a fund in various different circumstances.

Regulations 25 to 29 make consequential amendments to the principal Regulations. Regulation 25 amends regulation 70 (application of section 234A of ICTA) to make provision for the information to be provided to a participant in a Tax Elected Fund. Regulations 26 to 29 make consequential amendments to provide for the treatment of TEF distributions (non-dividend).

Regulation 30 amends regulation 95 of the principal Regulations, which regulation, as a consequence of the rewriting of Finance Act 1996, modifies the Corporation Tax Act 2009.

Regulation 31 amends regulation 96 of the principal Regulations to modify the provisions of the Income Tax (Trading and Other Income) Act 2005 in relation to Property AIFs and Tax Elected Funds.

Regulation 32 makes amendments to the Schedule to the principal Regulations to provide for abbreviations and defined expressions used in Part 4B.

Regulation 33 makes amendments to the Real Estate Investment Trusts (Assessment and Recovery of Tax) Regulations 2006 (S.I. 2006/2867) to provide that distributions by a Real Estate Investment Trust are not made gross.

A full Impact Assessment has not produced in relation to the insertion of Part 1A (the genuine diversity of ownership condition) as no impact on the private or voluntary sectors is foreseen. A full and final Impact Assessment has not been produced in relation to the insertion of Part 2B (diversely owned AIFs) as a negligible impact on the private or voluntary section is foreseen. A full Impact Assessment has been produced in relation to the insertion of Part 4B (Tax Elected Funds) and is available on the HMRC website under http://www.hmrc.gov.uk/ria/index.htm#full.

Footnotes

[^f00001]: 2005 c. 22.

[^f00002]: 2007 c. 3.

[^f00003]: S.I. 2006/964, referred to in the footnotes to these Regulations as “the principal Regulations”; relevant amending instruments are S.I. 2006/3239, 2007/683, 2007/794, 2008/705 and 2008/3159.

[^f00004]: Regulation 2 was amended by S.I. 2008/705 and 2008/3159.

[^f00005]: ITA 2007 is an abbreviation for the Income Taxes Act 2007 provided for in Part 1 of the Schedule to the principal Regulations.

[^f00006]: ICTA is an abbreviation for the Income and Corporation Taxes Act 1988 (c. 1) provided for in Part 1 of the Schedule to the principal Regulations. Section 839 was amended by paragraph 20 of Schedule 17 to the Finance Act 1995 (c. 4), paragraph 25 of Schedule 13 to the Finance Act 2006 (c. 25) and paragraph 223 of Schedule 1 to the Income Tax Act 2007 and by S.I. 1988/745 and 2005/3229.

[^f00007]: Regulation 14B was inserted by S.I. 2008/3159.

[^f00008]: Regulations 14C and 14D were inserted by S.I. 2008/3159.

[^f00009]: CTA 2009 is an abbreviation for the Corporation Tax Act 2009 (c. 4) inserted into Part 1 of the Schedule to the principal Regulations by regulation 32(2) of these Regulations.

[^f00010]: The text of the Kyoto Protocol is available at www.unfccc.int/kyoto_protocol/items/2830.php.

[^f00011]: Regulation 48 was amended by S.I. 2008/3159.

[^f00012]: Regulation 51 was substituted by S.I. 2008/3159.

[^f00013]: Regulation 52A was inserted by S.I. 2006/3239, amended by S.I. 2007/683 and substituted by S.I. 2008/3159.

[^f00014]: Section 130 was amended by paragraph 22 of Schedule 14 to the Finance Act 2009 (c. 10).

[^f00015]: CTA 2009 is an abbreviation for the Corporation Tax Act 2009 (c. 4) inserted into Part 1 of the Schedule to the principal Regulations by regulation 32(2) of these Regulations.

[^f00016]: ICTA is an abbreviation for the Income and Corporation Taxes Act 1988 (c. 1) provided for in Part 1 of the Schedule to the principal Regulations. Section 840ZA was inserted by paragraph 225 of Schedule 1 to the Income Tax Act 2007 (c. 3).

[^f00017]: ITA 2007 is an abbreviation for the Income Taxes Act 2007 (c. 3) provided for in Part 1 of the Schedule to the principal Regulations.

[^f00018]: Regulation 69D was inserted by S.I. 2008/705 and amended by S.I. 2008/3159.

[^f00019]: Regulation 69DA was inserted by S.I. 2008/3159.

[^f00020]: Regulation 69J was inserted by S.I. 2008/705 and amended by S.I. 2008/3159.

[^f00021]: Regulation 69O was inserted by S.I. 2008/705.

[^f00022]: Regulation 69P was inserted by S.I. 2008/705.

[^f00023]: Regulation 69Q was inserted by S.I. 2008/705.

[^f00024]: Regulation 69U was inserted by S.I. 2008/705.

[^f00025]: Regulation 69Z8 was inserted by S.I. 2008/705.

[^f00026]: Regulation 69Z8 was inserted by S.I. 2008/705.

[^f00027]: CTA 2009 is an abbreviation for the Corporation Tax Act 2009 (c. 4) inserted into Part 1 of the Schedule to the principal Regulations by regulation 32(2) of these Regulations.

[^f00028]: FA 2006 is an abbreviation for the Finance Act 2006 (c. 25) provided for in Part 1 of the Schedule to the principal Regulations.

[^f00029]: ICTA is an abbreviation for the Income and Corporation Taxes Act 1988 (c. 1) provided for in Part 1 of the Schedule to the principal Regulations; section 7(2) was amended by section 98(2) of the Finance Act 1990 (c. 29) and Part 3(28) of Schedule 27 to the Finance Act 1998 (c. 36).

[^f00030]: Part 9A was inserted by Schedule 14 to the Finance Act 2009 (c. 10).

[^f00031]: Section 931R was inserted by Schedule 14 to the Finance Act 2009.

[^f00032]: Section 234A was inserted by section 32(1) and (4) of the Finance (No. 2) Act 1992 (c. 45) and amended by paragraph 2(2)(a) of Schedule 37 to the Finance Act 1996 (c. 8).

[^f00033]: CTA 2009 is an abbreviation for the Corporation Tax Act 2009 (c. 4) inserted into Part 1 of the Schedule to the principal Regulations by regulation 32(2) of these Regulations.

[^f00034]: ITTOIA 2005 is an abbreviation for the Income Tax (Trading and Other Income) Act 2005 (c. 5) provided for in Part 1 of the Schedule to the principal Regulations.

[^f00035]: Part 2 of the Schedule was amended by S.I. 2007/794, 2008/705 and 2008/3159

[^f00036]: S.I. 2006/2867, to which there are no relevant amending instruments.