The Authorised Investment Funds (Tax) (Amendment) Regulations 2010

JurisdictionUK Non-devolved

2010 No. 294

Income Tax

Corporation Tax

Capital Gains Tax

The Authorised Investment Funds (Tax) (Amendment) Regulations 2010

Made 10th February 2010

Laid before the House of Commons 11th February 2010

Coming into force 6th March 2010

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 41(1) and 42 of the Finance Act 20082.

Preliminary

Preliminary

S-1 Citation, commencement and effect

Citation, commencement and effect

1.—(1) These Regulations may be cited as the Authorised Investment Funds (Tax) (Amendment) Regulations 2010 and come into force on 6th March 2010.

(2) These Regulations have effect from 6th March 2010.

This is subject to paragraph (3) and regulations 24 to 26.

(3) Regulations 10 (amendment of regulation 20 of the principal Regulations) and 11 (amendment of regulation 21 of the principal Regulations) have effect for accounting periods beginning on or after 6 March 2010.

Amendment of the principal Regulations

Amendment of the principal Regulations

S-2 Amendment of the Authorised Investment Funds (Tax) Regulations 2006

Amendment of the Authorised Investment Funds (Tax) Regulations 2006

2. The Authorised Investment Funds (Tax) Regulations 20063(“the principal Regulations”) are amended as follows.

S-3 Amendment of regulation 2

Amendment of regulation 2

3. In regulation 2 (structure of the Regulations)4after “Part 6 contains further provisions relating to AIFs;” insert—

“Part 6A contains provisions relating to Funds Investing in Non-Reporting Offshore Funds (FINROFs);”.

S-4 Amendment of regulation 8

Amendment of regulation 8

4. In regulation 8 (general interpretation)5, in the appropriate alphabetical place in each case, insert—

““prospectus” includes a proposed prospectus, supplements to a prospectus and supplements to a proposed prospectus;”,

““Statement of Recommended Practice” means, in relation to any accounting period for which it is required or permitted to be used, the Statement of Recommended Practice relating to authorised investment funds issued by the Investment Management Association in November 20086;”.

S-5 Amendment of regulation 12

Amendment of regulation 12

5. Paragraph (3) of regulation 12 (accounts prepared in accordance with UK generally accepted accounting practice)7is omitted.

S-6 Amendment of regulation 14B

Amendment of regulation 14B

6. For sub-paragraph (b) of paragraph (3) of regulation 14B (tax treatment of qualified investor schemes)8substitute—

“(b)

“(b) the total amount available for income allocation to participants must only be allocated in accordance with paragraph (1)(b) of regulation 17 (allocation of income).”.

S-7 Amendment of regulation 15

Amendment of regulation 15

7.—(1) Regulation 15 (interpretation) is amended as follows.

(2) For paragraph (1) substitute—

S-1

“1 In these Regulations—

(a) “income allocation” means the distribution of an amount to participants; and

(b) “distribution” includes the crediting of an amount to the capital part of the scheme property on behalf of a participant in respect of the participant’s accumulation units.”.

(3) In paragraph (2), for “distribution to participants” substitute “income allocation to participants”.

(4) Omit paragraph (3).

S-8 Amendment of regulation 17

Amendment of regulation 17

8.—(1) Regulation 17 (contents of distribution accounts)9is amended as follows.

(2) For the heading to the regulation, substitute “allocation of income” and omit the cross-heading immediately preceding the regulation.

(3) For paragraph (1) substitute—

S-1

“1 The total amount available for income allocation must be allocated in one of the following ways—

(a) for distribution as yearly interest (see regulations 18 to 21); or

(b) for distribution as dividends (see regulation 22).”.

(4) For paragraph (2) substitute—

S-2

“2 Amounts chargeable to corporation tax in accordance with Part 4 of CTA 200910must not be included in any amount of income allocated for distribution as yearly interest.”.

S-9 Amendment of regulation 18

Amendment of regulation 18

9. In paragraph (1) of regulation 18 (interest distributions: general) for “shown in the distribution accounts as available for distribution to participants is shown as available” substitute “available for income allocation is allocated”.

S-10 Amendment of regulation 20

Amendment of regulation 20

10. In regulation 20 (meaning of “qualifying investment”), after “Qualifying units in another authorised investment fund.” insert—

Category 4A

Qualifying units in an offshore fund.”.

S-11 Amendment of regulation 21

Amendment of regulation 21

11. After paragraph (5) in regulation 21 (meaning of “qualifying investments”: further provisions) insert—

S-5A

“5A For the purpose of category 4A, units in an offshore fund are qualifying units at any time in the relevant period if, and only if, the offshore fund would itself (on the relevant assumption) satisfy the qualifying investments test throughout that period.

S-5B

5B For the purposes of paragraph (5A), the relevant assumption is that the only investments of the offshore fund which are to be regarded as qualifying investments are those falling within categories 1 to 3 and 5 to 8.

S-5C

5C In paragraph (5B), references to investments of an offshore fund—

(a) in the case of an offshore fund which is a company, are references to investments which are the investments of the company, but do not include cash awaiting investment, and

(b) in the case of any other offshore fund, are references to investments subject to the trust or other arrangements constituting the investments of the other offshore fund, but do not include cash awaiting investment.”.

S-12 Amendment of regulation 22

Amendment of regulation 22

12. In paragraph (1) of regulation 22 (dividend distributions: general) for “shown in the distribution accounts as available for distribution to participants is shown as available” substitute “available for income allocation is allocated”.

S-13 Amendment of regulation 23

Amendment of regulation 23

13.—(1) Regulation 23 (provisions applying if amounts available for distribution are de minimis) is amended as follows.

(2) For sub-paragraphs (a) and (b) of paragraph (3) substitute—

“(a)

“(a) has calculated that the total income available for income allocations is a de minimis amount, and

(b)

(b) chooses to waive the allocation of that de minimis amount.”.

(3) In paragraph (7) for “shown in the fund’s distribution accounts as available for distribution” substitute “available for income allocation”.

S-14 Amendment of regulation 48

Amendment of regulation 48

14. In paragraph (2A)11of regulation 48 (general) for “section 95 of ICTA or section 219(4) of FA 1994” substitute “Chapter 2 of Part 3 of CTA 200912”.

S-15 Substitution of regulation 50

Substitution of regulation 50

15. For regulation 50 (references to gross income) substitute—

S-50

50. For the purposes of this Chapter, references to gross income are references to the net revenue before taxation determined in accordance with the Statement of Recommended Practice.”.

S-16 Amendment of regulation 69Z14

Amendment of regulation 69Z14

16.—(1) Regulation 69Z14 (attribution of distributions)13is amended as follows.

(2) For the heading substitute “allocation of income”.

(3) For the words “the total amount shown” to “shall be attributed” substitute “the total amount available for income allocation in an open-ended investment company to which this Part applies shall be attributed”.

S-17 Amendment of regulation 69Z25

Amendment of regulation 69Z25

17. In sub-paragraph (b) of paragraph (3) of regulation 69Z25 (documents to be included with company tax return)14for “the total income shown in the distribution accounts” substitute “the total amount available for income allocation”.

S-18 Amendment of regulation 69Z59

Amendment of regulation 69Z59

18.—(1) Regulation 69Z59 (allocation of distributions)15is amended as follows.

(2) For the heading substitute “allocation of income”.

(3) For paragraph (1) substitute—

S-1

“1 The total amount available for income allocation in a Tax Elected Fund shall be attributed as follows.”.

S-19 Amendment of regulation 69Z62

Amendment of regulation 69Z62

19. For sub-paragraph (b) of paragraph (2) of regulation 69Z62 (participants chargeable to corporation tax)16substitute—

“(b)

“(b) in regulation 50 (references to gross income) for “the net revenue before taxation shall be determined in accordance with the Statement of Recommended Practice” there shall be substituted “the amount attributed to TEF distributions (dividends) in accordance with regulation 69Z59 (allocation of income);”.”

S-20 Amendment of regulation 77

Amendment of regulation 77

20. For paragraph (1) of regulation 77 (non-discrimination in respect of different classes of shares) substitute—

S-1

“1 This regulation applies if there is an amount available for income allocation.”.

S-21 Insertion of Part 6A

Insertion of Part 6A

21. After Part 6 of the principal Regulations insert the following Part—

PART 6A

Funds Investing in Non-Reporting Offshore Funds

CHAPTER 1

Preliminary Provisions

S-85A

FINROFs

85A.—(1) This Part applies to—

(a)

(a) an authorised investment fund which meets the investment condition in regulation 85D (the investment condition);

(b)

(b) an authorised investment fund in respect of which an election has been made in accordance with regulation 85F (elective FINROFs);

(c)

(c) a participant in a fund mentioned in paragraph (a) or (b); and

(d)

(d) a participant in a fund which has left the FINROF regime, where the participant has not made a valid election under regulation 85Z11 (participant’s power to elect for deemed disposal).

(2) A fund to which this Part applies shall be known as a Fund Investing in Non-Reporting Offshore Funds (“FINROF”).

S-85B

Structure of this Part

85B. The structure of this Part is as follows—

This Chapter contains preliminary provisions;

Chapter 2 deals with entry into the Funds Investing in Non-Reporting...

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