IFM04530 - AIFs: Property authorised investment funds (PAIFs): breaches of conditions: breach of the corporate ownership condition

See also the information requirements at IFM04570.

Consequences of breaches of the condition (regulation 69Z5 SI 2006/964)

The regulation applies where the PAIF has breached the corporate ownership condition.

In circumstances where the breach is caused by the action of a shareholder in the PAIF and the manager has not taken reasonable steps to prevent the breach (see IFM04170 for details of what HMRC are likely to accept as 鈥榬easonable steps鈥�) then a charge to corporation tax charge may arise (referred to as a 鈥榮pecified breach鈥�) 鈥� see IFM04340 for details relating to the calculation of the tax charge.

Notwithstanding such a breach, the PAIF may continue to remain within the PAIF regime except in the following circumstances, where HMRC will issue a termination notice:

  • there are three 鈥榮pecified breaches鈥� in a period of ten years beginning with the first day of the accounting period in which the first specified breach occurs (regulation 69Z5(3)); or
  • regulation 69Z8 SI 2006/964 applies in respect of multiple breaches of separate conditions (see IFM04560).