Taxation of Chargeable Gains Act 1992 section 5AAA paragraph 32

Deemed disposals of UK land by company or fund ceasing to be qualifying etc

Section 5AAA paragraph 32 deals with what happens when a qualifying fund or qualifying company that has benefited from an exemption election for at least five years either loses that election or begins winding up, triggering a deemed disposal and reacquisition of UK land assets at market value.

• When a qualifying fund or company (Q) has held an exemption election for at least five continuous years and the election ends (other than through disqualification) or the fund begins winding up, Q is treated as having sold and immediately reacquired all its UK land-related assets at market value
• For assets held by a company within the structure that have been covered by the election for at least 12 months, a similar deemed disposal and reacquisition applies, but only to the "appropriate proportion" of the asset, calculated by reference to how much of any hypothetical £100 gain would have fallen within the exemption
• The deemed disposal does not apply where the election ends in "disqualifying circumstances" — meaning revocation by HMRC due to at least three serious breaches of the reporting and compliance requirements, or revocation on other specified grounds
• If Q is later wholly owned by another qualifying entity (A) that makes its own election, the two elections are treated as the same election for the purposes of meeting the five-year continuous period requirement