The Community Investment Tax Relief (Accreditation of Community Development Finance Institutions) Regulations 2003

Explanatory Note

(This note is not part of the Regulations)

Schedules 16 and 17 of the Finance Act 2002 provide for tax relief for investments made by individuals and companies in bodies which are accredited as community development finance institutions (“CDFIs”). The relief is called community investment tax relief. CDFIs are bodies which invest in enterprises for disadvantaged communities. These Regulations make provision for the accreditation of such bodies.

Part 1 contains regulation 1 and 2. Regulation 1 provides for citation and commencement, and regulation 2 for interpretation.

Part 2 contains regulations 3 to 5 which provide for applications and criteria for accreditation.

Regulation 3 provides for criteria to be satisfied for accreditation by reference to the Community Investment Tax Relief, Material Concerning the Accreditation of Community Development Finance Institutions published by the Secretary of State for Trade and Industry on 15th January 2003, which can be found at www.sbs.gov.uk/finance/citr.php.

Regulations 4 and 5 provide for notification of the grant of accreditation and refusal to grant accreditation.

Part 3 contains regulations 6 to 14 and set out the terms and conditions of accreditation.

Regulation 7 provides for the publication by the Secretary of State of specified information in relation to the CDFI.

Regulation 8 sets out the amount of the investment fund to be invested by the CDFI in relevant investments in qualifying enterprises at the first, second and third anniversaries of accreditation and at all times thereafter. Regulation 9 gives the meaning of the “investment fund”. Regulation 10 gives the meaning of “qualifying enterprise”; the geographic areas referred to in Case 1 are identified in Annex A of the Material Concerning the Accreditation of Community Development Finance Institutions published by the Secretary of State for Trade and Industry. The Government recognised measures of disadvantage referred to in Case 2 are set out in Annex A of the Material Concerning the Accreditation of Community Development Finance Institutions. Regulation 11 gives the meaning of “relevant investment” and provides that the investments specified in Schedule 1 are not relevant investments.

Regulation 12 provides for instances where the qualifying investments in the CDFI will exceed 125% of the amount of qualifying investments stated in the CDFI’s application for accreditation.

Regulation 13 sets out the reporting requirements. The form of the annual report provided by the Secretary of State for this purpose can be found at Annex C of the Material Concerning the Accreditation of Community Development Finance Institutions.

Regulation 14 sets out the requirements for the CDFI to issue a tax relief certificate.

Part 4 contains regulations 15 and 16.

Regulation 15 provides for the withdrawal of accreditation.

Regulation 16 provides for appeals against refusals to grant accreditation and withdrawals of accreditation.

Schedule 1 sets out investments which are not relevant investments.