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HMRC internal manual

Company Taxation Manual

Authorised investment funds: qualified investor schemes: substantial QIS holding: 'inadvertent breach': time limit

Time limit for disposal to retain normal tax treatment

(Note that references to units in any authorised investment fund include references toshares in an open-ended investment company.)

If a participant has ‘inadvertently acquired’ (CTM48740)a ‘substantial QIS holding’ then:

  • provided that the size of the holding is reduced to less than 10% of the net asset value of the qualified investor scheme (QIS) fund, and
  • that this is done by the second reporting date (CTM48725) following the date when the holding became substantial,

the participant can retain normal tax treatment in respect of their holding in thatQIS, (SI2006/964 Regulation 63).

Note that the size of the holding is calculated, for the purposes of the 10% limit, afteraggregation with the holdings of connected and associated persons (SI2006/964 Regulation54(1) and CTM48710).

Examples of tax treatment if a substantial holding is reduced within the time limit andretained are at CTM48750 and CTM48755 respectively.