CFM14011a - Collective investment schemes: company holdings: definition of relevant holding
Relevant holding
This guidance describes the post FA 2002 provisions for the
taxation of loan relationships, derivative contracts and
forex.
A relevant holding is:
- any rights under a unit trust scheme (this includes both authorised and unauthorised unit trust schemes)
- any shares in an OEIC (that is an OEIC incorporated in the UK), or
- any relevant interest in an offshore fund,
where, at any time in the company’s accounting period, the
unit trust, company or fund fails to satisfy the non-qualifying
investments test.
The non-qualifying investments test is as defined in
FA96/SCH10 and explained in
CFM14010b.
Where these provisions apply any gains and losses reflected
in the increased value of the underlying units or shares and
consequently of the relevant contract will be brought into charge
on the company.
Since an OEIC is a company and an AUT is treated as a company
for corporation tax purposes it is possible that they could be
subject to FA02/SCH26/PARA36 in respect of their own holdings in
relevant contracts . However notwithstanding that the holding is a
'derivative contract' and that an authorised mark to market basis
(for periods of account beginning before 1 January 2005) and a fair
value basis of accounting (for periods of account beginning on or
after 1 January 2005) applies for the purpose of Schedule 26, where
any profits or losses arising are properly accounted for as capital
profits in accordance with the applicable accounting standard those
profits and losses must not be brought into account as credits or
debits for the purpose of Schedule 26.
Please contact CT & VAT Technical where advice is
needed on the pre-FA 2002 rules.
