The Authorised Investment Funds (Tax) Regulations 2006

[F1Distribution to holder of excessive rights: charge to taxU.K.
This section has no associated Explanatory Memorandum

69Z12.—(1) This regulation applies if an open-ended investment company to which this Part applies—

(a)makes a distribution to, or in respect of, a holder of excessive rights (see regulation 69Z13), and

(b)the company has not taken reasonable steps to prevent the possibility of such a distribution being made.

(2) The company is treated as having received an amount of income calculated in accordance with paragraph (3).

(3) The amount of the income is determined by the formula—

  • I  x  P

(4) In paragraph (3)—

I is the net income of F (tax-exempt) distributable in accordance with regulation 69Z14(a);

P is the percentage of the rights to the net asset value of the company held by, or on behalf of, the holder of excessive rights.

(5) The amount determined in accordance with paragraph (3) shall be charged to corporation tax as if it were income of F (residual) chargeable under Case VI of Schedule D arising in the accounting period in which the distribution mentioned in paragraph (1) was made by the company.

(6) No loss, deficit, expense or allowance may be set off against the amount charged to tax by paragraph (5).]

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