IFM09540 - Changes in and Breaches of Qualifying conditions and notification requirements: Breaches of qualifying conditions: breaches of restriction condition
The restriction requirement is met at any time that a scheme meets at least one of the following conditions:
- the non-UK property assets condition
- the UK property rich condition
- the exempt investor condition.
When a RIF breaches the restriction requirement, Regulation 18 provides for a cure period and notification requirement (under Reg 18(3) and 18(5)) that operates on the same basis as the cure period applicable for breaches of the ownership requirement with the following exceptions:
- The deemed sale and reacquisition of participants’ units occurs immediately before the time of all breaches where the RIF rectifies the breach by the end of the 9 month period (so there is no initial 30 day grace period as there is for breaches of the ownership requirement).
- If the breach relates to the exempt investor condition and the operator has taken reasonable steps to monitor compliance with that condition, the 9 month cure period starts from the day the operator became aware of the breach.
A RIF operator failing to comply with the notification requirements in Reg 18(3) and (5) within the prescribed time limit may be liable to a penalty (IFM09770).