Taxation of Chargeable Gains Act 1992 Schedule 5AAA paragraphs 27–29

Temporary period during which applicable exemption conditions not met

Section 5AAA paragraphs 27–29 provide flexibility for qualifying funds or qualifying companies that have elected for the exemption regime but temporarily fail to meet the applicable exemption conditions, for reasons other than ceasing to be UK property rich.

• Where the fund manager expects the exemption conditions to be met again within 30 days, and they are, the failure is completely ignored — but this short-term relief can only be used up to four times in any 12-month period.
• Where a longer temporary failure occurs (up to a maximum of 9 months), the election continues in effect but a deemed disposal is triggered at the point the conditions ceased to be met.
• The 30-day relief takes priority: the longer temporary period rule only applies if the 30-day rule does not.
• If the longer temporary period rule has been used on one or more occasions, any remaining deemed gain from the deemed disposal is deferred and treated as accruing when the relevant fund is wound up.