Finance Act 1996

Non-qualifying investments test

8 (1) For the purposes of paragraph 4 above a unit trust scheme or offshore fund fails to satisfy the non-qualifying investments test at any time when the market value of the qualifying investments exceeds 60 per cent. of the market value of all the investments of the scheme or fund.

(2) Subject to sub-paragraph (8) below, in this paragraph “qualifying investments”, in relation to a unit trust scheme or offshore fund, means investments of the scheme or fund which are of any of the following descriptions—

(a) money placed at interest;

(b) securities;

(c) shares in a building society;

(d) qualifying holdings in a unit trust scheme or an offshore fund.

(3) For the purposes of sub-paragraph (2) above a holding in a unit trust scheme or offshore fund is a qualifying holding at any time if—

(a) at that time, or

(b) at any other time in the same accounting period,

that scheme or fund would itself fail (even on the relevant assumption) to satisfy the non-qualifying investments test.

(4) For the purposes of sub-paragraph (3) above the relevant assumption is that investments of the scheme or fund are qualifying investments in relation to that scheme or fund only if they fall within paragraphs (a) to (c) of sub-paragraph (2) above.

(5) References in this paragraph to investments of a unit trust scheme or offshore fund are references, as the case may be—

(a) to investments subject to the trusts of the scheme, or

(b) to assets of the fund,

but in neither case do they include references to cash awaiting investment.

(6) References in this paragraph to a holding—

(a) in relation to a unit trust scheme, are references to an entitlement to a share in the investments of the scheme; and

(b) in relation to an offshore fund, are references to shares in any company by which that fund is constituted or any entitlement to a share in the investments of the fund.

(7) In this paragraph “security” does not include shares in a company.

(8) The Treasury may by order amend this paragraph so as to extend or restrict the descriptions of investments of a unit trust scheme or offshore fund that are qualifying investments for the purposes of this paragraph.