C2.1165 Property rich collective investment vehicles—who is eligible to make the exemption election?
Eligible offshore CIVs can elect to be exempt from corporation tax on chargeable gains accruing on direct and indirect disposals of UK land provided they1:
• are UK property rich companies (or deemed companies under TCGA 1992, Sch 5AAA, Pt 2, para 4)
• meet qualifying conditions as set out in TCGA 1992, Sch 5AAA, Pt 4, para 13, and
• provide certain information to HMRC annually
The exemption election prevents multiple layers of tax by restricting any tax charge to the investor level only.
The exemption extends to direct and indirect disposals of UK land by persons in which the CIV invests provided the CIV has at least a 40% investment in that person (calculated by applying the rules in TCGA 1992, Sch 1A, see C2.1150–C2.1154, as if the references to 25% were to 40%)2.
Who is eligible to make the exemption election?
Provided certain qualifying conditions are met (see below), the following entities are eligible to make the exemption election3:
(a) an offshore CIV that is a UK property rich company (including certain deemed companies under TCGA 1992, Sch 5AAA, Pt 2, para 4). The election provides exemption for the CIV itself and for entities in which it has at least a 40% investment
(b) a CIV which is a partnership (based in any jurisdiction, including the UK), in respect of one or more companies that it directly holds at least a 99% investment in. The company or
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