Taxes Consolidation Act 1997 section 835AVB

Collective investment scheme

Section 835AVB defines "collective investment scheme" for the purposes of the reverse hybrid mismatch rules, setting out the conditions under which a tax-transparent investment vehicle is excluded from the reverse hybrid rule.

• A collective investment scheme is a relevant investment undertaking (common contractual fund, investment limited partnership, or relevant partnership) that is both widely held and holds a diversified portfolio of assets.
• An undertaking is widely held where it has no beneficial owner — meaning no individual ultimately owns or controls more than 25 per cent of the undertaking.
• A diversified portfolio is assessed against qualitative and quantitative criteria, with hard limits: no more than 20 per cent of securities may be issued by a single issuer, and land holdings must comprise at least three properties with none exceeding 40 per cent of total value.
• Grace periods apply during start-up (24 months from first investment), wind-down (12 months), and for temporary inadvertent breaches of the conditions during the life of the fund.