iii) Some or all of the units received in consideration for the initial seeding are disposed of within the Control Period or under an arrangement entered into during the Control Period. If the investor has also acquired units through other means (e.g. normal subscription or secondary market transactions), these are assumed to be sold first.

iv) A seeded residential property is occupied by a person connected with the fund.

Genuine diversity of ownership test

The test is only required for the CoACS as the PAIF rules already include such a test, failing which would result in it ceasing to be a PAIF.  The tests for a CoACS in this Finance Bill are more about the process of marketing the fund than ultimately achieving diversity of ownership. As such, they are somewhat subjective. The legislation is reproduced on the right.

Although the legislation establishes requirements that are subjective, provides that the operator of a CoACS may apply to HMRC for formal clearance that the scheme meets the GDO condition. HMRC is required to give its decision within 28 days of receipt of the required information. Any clearance given is conditional upon that information remaining materially unchanged and the scheme continuing to operate in accordance with it.

Further information

Further information on PAIFs, TTFs and other fund vehicles can be found in our real estate fund structuring seminar slides here.