IFM14534 - Types of breaches: minor breaches

A breach of a requirement imposed by the regulations is a ‘minor breach’ if it is not specified as a serious breach under Chapter 4 of Part 2 of the regulations (SI 2011/2999) and:

• there is a reasonable excuse for the breach; and
• it is inadvertent and corrected as soon as reasonably practicable.

Regulation 25(5) provides that a minor breach will not be regarded as a breach at all if the investment trust in question:

• notifies HMRC of the breach in accordance with regulation 24; and
• corrects the breach as soon as reasonably practicable without any intervention by HMRC.

For these purposes, there will only be an intervention if it is necessary for HMRC to ask an investment trust to provide them with information relating to a requirement imposed by the regulations, and / or to tell the company that it needs to take further action in order to correct the breach. Where HMRC simply request information in order to check that an investment trust has taken the necessary action to correct a breach on its own initiative, then that will not in itself constitute an intervention by HMRC.

A specified number of minor breaches within a certain period of time will constitute a serious breach (see IFM14540).