AIFs: Property authorised investment funds (Property AIFs): breaches of conditions: breach of the genuine diversity of ownership condition
See also the information requirements at CTM48877.
Consequences of a breach of the condition (regulation 69Z4 SI 2006/964)
If a Property AIF breaches the genuine diversity of ownership condition (regulation 69JSI 2006/964 as explained at CTM48816), then in addition to the information requirements set out at CTM48877 the manager must also set out (regulation 69Z4(2)(e) and (f)):
- the steps that the manager proposes to take to rectify the breach, and
- the date by which the manager proposes to rectify the breach.
The manager must rectify the breach as soon as may reasonably be achieved.
In order for HMRC to determine whether the time specified by the manager is reasonable or not, it is advisable for the manager to advise HMRC what needs to be done in order to rectify the breach, and why the proposed timescale should be considered to be reasonable.
The Commissioners of HMRC will issue a termination notice if they consider that the steps proposed by the Property AIF will not rectify the breach or will not do so by the earliest reasonable date (regulation 69Z4(4).
If there are three or more different breaches of the genuine diversity of ownership condition in three different accounting periods within a 10 year period (beginning on the first day of the accounting period in which the Property AIF becomes aware of the first breach), HMRC will issue a termination notice to the manager of the Property AIF (regulation 69Z4(5)).