IFM04180 | Property authorised investment funds (PAIFs): introduction and conditions of membership for the regime: the loan creditor condition

This condition (69M SI 2006/964) restricts the way in which a PAIF can borrow money. The purpose is to prevent income or capital growth being extracted from the PAIF via a profit-related loan. The PAIF will be in breach of this condition if it is the debtor in a loan which is not a normal commercial loan.

The wording in the legislation is similar to the definition of ‘normal commercial loan’ in section 162 of the Corporation Tax Act 2010. For more guidance see CTM81010 and CTM81020.