PART 2U.K.THE TAX TREATMENT OF AUTHORISED INVESTMENT FUNDS

[F1Treatments applying to authorised investment funds with specific investment purposesU.K.

Textual Amendments

F1Reg. 14ZD and cross-heading inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Authorised Investment Funds (Tax) (Amendment No. 2) Regulations 2011 (S.I. 2011/2192), regs. 1(1), 4

Index tracking fundsU.K.

14ZD.—(1) This regulation applies if—

(a)an authorised investment fund has an interest in a non-reporting fund, and

(b)the conditions in paragraph (2) are met throughout the relevant period.

(2) The conditions are that—

(a)in accordance with either the authorised investment fund’s prospectus or the instrument constituting the authorised investment fund, the aim of the authorised investment fund’s investment policy is to replicate the performance of a qualifying index,

(b)the main purpose of the investment in the non-reporting fund is to represent the composition of the qualifying index, and

(c)the capital and income returns of the authorised investment fund replicate as closely as practicable the returns of the investments comprised in the qualifying index.

(3) For the purposes of paragraph (2) an index is a “qualifying index” if—

(a)it is based solely on the value of securities listed on a recognised stock exchange or admitted to trading on a regulated market,

(b)either [F2the Financial Conduct Authority] or an authority responsible for regulating offshore funds recognises the index on the basis that—

(i)its composition is sufficiently diverse,

(ii)it represents an adequate benchmark for the market to which it refers, and

(iii)it is published in such a way that it is widely available, and

(c)it is calculated and published by a body which is managed independently from the management of the authorised investment fund.

(4) Regulation 17 of the Offshore Funds Regulations does not apply in respect of a disposal of the interest in the non-reporting fund by the authorised investment fund.

(5) In this regulation “the relevant period” means the period—

(a)starting on the day the authorised investment fund acquires the interest in the non-reporting fund (or any part of it), and

(b)ending on the day of the disposal of the interest.

(6) In this regulation—

F3(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F4(b)“regulated market” means—

(i)a UK regulated market within the meaning given by Article 2.1(13A) of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments,

(ii)an EU regulated market within the meaning given by Article 2.1(13B) of that Regulation, and

[F5(iii)a Gibraltar regulated market within the meaning given by Article 26(11)(b)(i) of that Regulation.]]]

Textual Amendments