CITM5010 - General conditions applying to investors and investments: Control of a community development finance institutions (CDFI) by the investor

CTA2010/Part7/Chapter 3/S231; ITA/s350

Tax relief under the CITR scheme is not available to investors if -

• during the five-year period starting on the day the investment is made
• the investor, including any person connected with the investor,
• possesses, or is entitled to acquire in the future, rights or powers that give the investor control of the CDFI

Meaning of Control

Where the CDFI is a company “control” is determined in accordance with ITA/995.

In other cases “control” means having the power to ensure that the CDFI conducts its affairs in accordance with the wishes of the investor through:

• possession of voting power in the CDFI, or
• any powers conferred on the investor by the constitution of the CDFI or other regulatory documents.

Meaning of Connected

Whether or not someone is connected with the investor is determined in accordance with CTA2010/Ss1122 and 1123, and ITA/s993.

But where the CDFI is a partnership whose membership includes the investor ITA/s993 would, by attributing the powers of other partners to the investor, automatically assign control of the CDFI to the investor. So, for the purposes of establishing whether the investor controls such a partnership the other members of the partnership are not, by virtue of their membership the CDFI, regarded as partners of the investor.

Attribution of Powers

For the purposes of determining whether an investor controls the CDFI it is necessary to attribute to the investor:

• any rights or powers that the investor is entitled to acquire in the future, and
• any rights and powers held by someone else on behalf of the investor, or which the other person may be required to exercise at the direction of the investor on his behalf.