IFM04540 - AIFs: Property authorised investment funds (PAIFs): breaches of conditions: breach of the loan creditor condition

See also the information requirements at IFM04570.

Consequences of breaches of the loan creditor condition

Under regulation 69Z6 SI 2006/964 if the PAIF inadvertently breaches this condition (set out in regulation 69M SI 2006/964 – see IFM04180) but rectifies this within 28 days of discovering the breach no further action will be taken by HMRC.

However, HMRC will issue a termination notice in the following circumstances:

• if the manager does not rectify the inadvertent breach within 28 days of first becoming aware of the breach;
• if the PAIF is in breach of this condition through the negligent or intentional actions of the manager;
• if there are two breaches of the same condition A, B or C in paragraphs (2) to (5) of the loan creditor condition (regulation 69M SI 2006/964) in three different accounting periods within a 10 year period, beginning on the first day of the accounting period in which the manager becomes aware of the first breach; or

if there are three breaches of any of the conditions A, B or C set out in paragraphs (2) to (5) of the loan creditor condition (regulation 69M SI 2006/964) in three different accounting periods within a 10 year period, beginning on the first day of the accounting period in which the manager becomes aware of the first breach.