PART 2Exempt unauthorised unit trusts

CHAPTER 1Meaning of “exempt unauthorised unit trust”

Meaning of “exempt unauthorised unit trust”3

1

For the purposes of these Regulations an unauthorised unit trust is an “exempt unauthorised unit trust” with respect to a period of account if—

a

its trustees are UK resident for the period,

b

throughout the period all of its unit holders are eligible investors,F1...

c

it is approved under these Regulations for the periodF2, and

d

it is not treated by regulations made in exercise of the powers conferred by section 1007(2) of ITA 2007 as not being a unit trust scheme for the purposes of the definition of “unauthorised unit trust” in section 989 of that Act.

2

For the purposes of these Regulations a unit holder is an “eligible investor” if—

a

any gain accruing in the event of a disposal of its units would be wholly exempt from capital gains tax or corporation tax (otherwise than by reason of residence), or

b

it holds all of its units pending disposal in the capacity of manager of the unauthorised unit trust.

3

In determining whether paragraph (2)(a) applies no account is to be taken of the possibility of a charge to corporation tax on income in respect of a gain accruing on a disposal by an insurance company or a friendly society.

4

An unauthorised unit trust is not to be regarded as failing to meet the condition in paragraph (1)(b) in relation to any unit holder if—

a

the managers or trustees of the unit trust become aware at any time that the unit holder is not an eligible investor,

b

they could not reasonably have been expected to have become aware of that fact before that time, and

c

the unit holder disposes of its units before the end of the period of 28 days beginning with that time.

5

Paragraph (4) may not be relied on more than twice in any period of ten years.