Taxation of Chargeable Gains Act 1992 Schedule 5AAA paragraph 20

Qualifying fund or company ceasing to meet applicable exemption conditions

Paragraph 20 deals with what happens when a qualifying fund or qualifying company that has previously elected for exemption under paragraph 12 subsequently ceases to meet the required exemption conditions.

• Where a qualifying fund or company has made an exemption election under paragraph 12 but later fails to meet the applicable exemption conditions, the election ceases to have effect from that point onwards.
• Any disposals made at or after the time the conditions cease to be met will no longer benefit from the exemption.
• Temporary lapses may be permitted — up to 30 days for certain conditions (paragraph 27) or up to 9 months more broadly (paragraph 28) — without permanently losing the exemption.
• Where a fund manager is taking steps to wind up the relevant fund (paragraph 30), this may also affect how the loss of exemption conditions is treated.