[F1Withdrawal of relief: dwelling occupied by non-qualifying individualU.K.
Textual Amendments
F1Sch. 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
8(1)This paragraph applies to a transaction (“the relevant transaction”) if—U.K.
(a)PAIF seeding relief has been allowed in respect of the transaction,
(b)the main subject-matter of the transaction consists of a chargeable interest in or over land which is or includes a dwelling, and
(c)a non-qualifying individual (see paragraph 9) is permitted to occupy the dwelling at any time on or after the effective date of the transaction.
The dwelling which a non-qualifying individual is permitted to occupy is referred to as “the disqualifying dwelling”.
(2)The relief, or an appropriate proportion of it, is withdrawn, and tax is chargeable in accordance with this paragraph.
This is subject to sub-paragraphs (3) and (4).
(3)Relief is withdrawn only if, at the time a non-qualifying individual is permitted to occupy the disqualifying dwelling, the property AIF holds a chargeable interest in or over that dwelling—
(a)that was acquired by the property AIF under the relevant transaction, or
(b)that is derived from an interest so acquired.
(4)Where a non-qualifying individual is first permitted to occupy the disqualifying dwelling at a time after the end of the control period, relief is withdrawn only if, at that time, the purchaser in the relevant transaction fails to meet the genuine diversity of ownership condition set out in regulation 9A of the AIF (Tax) Regulations.
For the purposes of this sub-paragraph, regulation 9A(2)(a) of those Regulations is to be read as if the words “throughout the accounting period” were omitted.
(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 (2) and (5), an “appropriate proportion” means an appropriate proportion having regard to the extent to which the subject-matter of the relevant transaction was an interest in or over land other than the disqualifying dwelling.
9(1)In paragraph 8 “non-qualifying individual”, in relation to a land transaction and a property AIF, means any of the following—U.K.
(a)an individual who is a major participant in the property AIF;
(b)an individual who is connected with a major participant in the property AIF;
(c)an individual who is connected with the property AIF;
(d)a relevant settlor;
(e)the spouse or civil partner of an individual falling within paragraph (b), (c) or (d);
(f)a relative of an individual falling within paragraph (b), (c) or (d), or the spouse or civil partner of a relative of an individual falling within paragraph (b), (c) or (d);
(g)a relative of the spouse or civil partner of an individual falling within paragraph (b), (c) or (d);
(h)the spouse or civil partner of an individual falling within paragraph (g).
(2)An individual who participates in a property AIF is a “major participant” in it if the individual—
(a)is entitled to a share of at least 50% either of all the profits or income arising from the property AIF or of any profits or income arising from it that may be distributed to participants, or
(b)would in the event of the winding up of the property AIF be entitled to 50% or more of the assets of the property AIF that would then be available for distribution among the participants.
(3)The reference in sub-paragraph (2)(a) to profits or income arising from the property AIF is to profits or income arising from the acquisition, holding, management or disposal of the property subject to the property AIF.
(4)In this paragraph—
“relative” means brother, sister, ancestor or lineal descendant;
“relevant settlor”, in relation to a land transaction, means an individual who is a settlor in relation to a relevant settlement (as defined in sub-paragraph (5));
“settlement” has the same meaning as in Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act).
(5)Where a person, in the capacity of trustee of a settlement, is connected with a person who is the purchaser under a land transaction, that settlement is a “relevant settlement” in relation to the transaction.
(6)In sub-paragraph (5) “trustee” is to be read in accordance with section 1123(3) of CTA 2010 (“connected” persons: supplementary).
(7)Section 1122 of CTA 2010 (connected persons) has effect for the purposes of this paragraph, but for those purposes, subsections (7) and (8) of that section (application of rules about connected persons to partnerships) are to be disregarded.]