IFM14429 - Winding up of investment trust: Conditions A and B deemed to be met

Investment trusts may have a limited life or be wound up for other reasons. An investment trust that is winding up continues to satisfy the eligibility conditions A and B if the conditions of the deeming provisions in the Regulations apply. ‘Winding up’ has the meaning given within CTA09/S12.

Condition A: Once an investment trust is being wound it, it may have divested itself of a significant proportion of its assets. Regulation 15 of SI 2011/2999 deems that condition A is met in such circumstances, subject to certain conditions.

Condition B: There may be some doubt as to whether an investment trust that is being wound up continues to satisfy condition B. That is, its ordinary share capital is traded on a regulated market in relation to an accounting period that commences on the date the winding up is started. Regulation 15 deems that condition B is met in such circumstances, subject to certain conditions.

In order for the deeming provisions in regulation 15 to apply, the company must have been approved and met all of the eligibility conditions in the accounting period ending immediately prior to the date the winding up commenced.

Once the winding up commences the company may not make any new investments during the realisation period (i.e. the period during which assets are being realised), with the exception of placing proceeds of disposals on deposit or using the proceeds to purchase gilts.

HMRC must also have been notified in writing of the winding up within a period of one year from its commencement, and remain satisfied during the period of winding up that it is not being unreasonably prolonged (regulation 16 of SI 2011/2999).