IFM09430 - Becoming a RIF: Conditions not initially met: Qualifying condition not met in grace period
If a relevant condition is not met within 12 months then the deemed meeting of the condition will end, and there will be a breach of the condition.
If, during the 12 month period, it becomes apparent that there is no longer a reasonable expectation that the co-ownership scheme will meet the relevant condition within 12 months, then the operator must notify HMRC in accordance with Regulation 16(2) (for ownership requirement) or Regulation 18(3) (restriction requirement) within 30 days beginning with the day on which it becomes apparent. If the RIF operator fails to do so there may be a penalty (IFM09770).
The grace period ceases to apply in relation to the scheme from the beginning of the day when it became apparent, and there will be a breach of the condition.
The deemed meeting of the ownership requirement or the UK property rich condition ceases from the date on which the scheme meets the ownership requirement or the UK property rich condition. This means that the scheme cannot rely on deeming the conditions to be met within the initial 12 month period where there is a subsequent breach of the condition.
Where a scheme is relying on both Regulation 9 and Regulation 13, the two initial periods operate independently. A scheme may therefore cease to be able to rely on one initial-period rule while continuing to rely on the other, provided the conditions for that other rule continue to be met.