IFM04240 - Property authorised investment funds (PAIFs): process and effects of entry into the PAIF regime: advance clearance procedure for genuine diversity of ownership

Under regulation 9B SI 2006/964, a PAIF can apply for a clearance from HMRC that it meets the genuine diversity of ownership condition (see IFM04160) before submitting its notice to elect to join the regime.

To do so, the manager (or proposed manager) must apply in writing to HMRC and send the following documents that apply or are proposed to apply at the beginning of the first accounting period that the PAIF enters the regime:

• the open-ended investment company’s proposed instrument of incorporation; and
• its proposed prospectus (including any supplements to the prospectus).

HMRC must consider the application within 28 days of its receipt and must confirm in writing its decision either to:

• request further information, in which case time for the purposes of the 28 day period will be suspended and will re-start once all the relevant information has been received;
• give clearance (which may be subject to stated conditions); or
• deny clearance.

The PAIF will not be able to rely on any clearance given, if:

• the PAIF later acts in contravention of any relevant statement in the relevant documents provided; or
• the documents submitted to the FSA are, in any relevant respect, not in accordance with the documents considered when clearance was given by HMRC or are subsequently amended in any material way.

Once clearance has been obtained then, provided that the intention is to proceed without further changes the manager (or proposed manager) may proceed to give notice of entry at any time before the regime will begin to apply (regulation 69P(7) or (8) SI 2006/964). In all other respects, except for the notice period, the same rules apply to giving notice as normal.

Any applications for clearances should be submitted to HMRC’s Collective Investment Schemes Centre.