Section 490 | Holdings in OEICs, unit trusts and offshore funds treated as creditor relationship rights

(1)This section applies if—

(a)at any time in an accounting period of a company it holds—

(i)any shares in an open-ended investment company,

(ii)any rights under a unit trust scheme, or

(iii)an interest in an offshore fund, and^F1

(b)there is a time in the period when that company, scheme or fund fails to meet the qualifying investments test (see section 493).

(2)The Corporation Tax Acts have effect for the accounting period in accordance with subsection (3) as if—^F2

(a)the relevant holding were rights under a creditor relationship of the company, and^F2

(b)any distribution in respect of the relevant holding were not a distribution (and accordingly is within Part 5).^F2

(3)The credits and debits to be brought into account for the purposes of Part 5 in respect of the company's relevant holdings are to be determined on the basis of fair value accounting.

(4)Repealed^F3

(5)Repealed^F3

(6)In this section and sections 491 and 492 “relevant holding” means a holding within subsection (1)(a).

(7)But the following are not treated as such a holding—^F4

(a)arrangements that are investment bond arrangements for the purposes of Chapter 6 of this Part or are within section 48A of FA 2005 (alternative finance arrangements: alternative finance investment bond: introduction) , and^F4F5

(b)a holding in an offshore fund (including a unit trust which is also an offshore fund) if the income arising to the fund is treated as the income of the company^F5

(8)See section 18(2)(c)(i) of F(No.2)A 2005 (section 17(3): specific powers) for the power to modify “relevant holding” for the purposes of this section and section 492 by regulations under section 17(3) of that Act (regulations about authorised unit trusts and OEICS).