IFM03326 | Authorised investment funds (AIFs): taxation of investors within the charge to CT: qualifying investments test

Rules for determining when a company holding fails the qualifying investments test – Chapter 3 of Part 6 Corporation Tax Act 2009 (CTA09)

The test is failed when the AIF has qualifying investments which have a market value over 60% of the AIF’s total assets at any time during the investor’s accounting period.

The list of qualifying investments includes all those which enable an AIF to make an interest distribution (Regulation 20 of SI2006/964) so any holding in an AIF which could make an interest distribution (whether or not it actually does so) automatically fails the test.

The list also includes qualifying holdings in offshore funds which would themselves fail to satisfy the qualifying investments test.

A person within the charge to CT (usually a company) is required to treat the holding as a loan relationship (as described at IFM03324) if the AIF in which it has a holding fails the test at any time during that person’s accounting period for CT.