PAIFs—the conditions
Produced in partnership with Martin Shah of Simmons & Simmons LLP based on material originally written by Charles Goddard of Rosetta Tax LLP
PAIFs—the conditions

The following Tax practice note produced in partnership with Martin Shah of Simmons & Simmons LLP based on material originally written by Charles Goddard of Rosetta Tax LLP provides comprehensive and up to date legal information covering:

  • PAIFs—the conditions
  • The conditions
  • The property investment business condition
  • The genuine diversity of ownership condition
  • The corporate ownership condition
  • The loan creditor condition
  • The balance of business conditions
  • The income test
  • The assets test
  • The notification condition
  • More...

The regime for property authorised investment funds (PAIFS) applies to UK open-ended investment companies (OEICs) which, on entry:

  1. satisfy a number of conditions, and

  2. notify HMRC that they wish the PAIF regime to apply to them

and thereafter continue to satisfy those conditions throughout any particular period of account.

This Practice Note looks at the detail of the conditions which must be met for the PAIF regime to apply.

The PAIF regime as a whole is covered in summary in Practice Note:PAIFs—summary.

Other aspects of the regime are examined in Practice Notes:

  1. PAIFs—taxation of the scheme

  2. PAIFs—taxation of the participants, and

  3. PAIFs—compliance and vouchers

For details of the consequences of breaches of the conditions and the tax effects of exit from the regime, see Practice Note: PAIFs—breach of the conditions and exit.

There is a good deal of overlap between the PAIF regime and the UK’s rules for Real Estate Investment Trusts (REITs). Given the intended complementary nature of the two regimes (the first being for open-ended vehicles investing in real estate with the second designed for closed-ended vehicles established with a similar purpose) this is unsurprising.

For more on the UK-REIT regime generally, see Practice Note: Real estate investment trusts—summary.

In this Practice Note, references to the AIF Regulations are to the Authorised Investment Funds (Tax) Regulations 2006 (SI 2006/964).

The conditions

A number of conditions must be met on

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