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Statutory Instrument 2003 No. 96The Community Investment Tax Relief (Accreditation of Community Development Finance Institutions) Regulations 2003(The document as of February, 2008. Arhiv.Online Library) STATUTORY INSTRUMENTS2003 No. 96INCOME TAXThe Community Investment Tax Relief (Accreditation of Community Development Finance Institutions) Regulations 2003
The Treasury, in exercise of the powers conferred upon them by paragraphs 4(2)(b), (4), (5), (6) and 5 of Schedule 16 to the Finance Act 2002[1] hereby make the following Regulations: Citation and commencement 1.These Regulations may be cited as the Community Investment Tax Relief (Accreditation of Community Development Finance Institutions) Regulations 2003 and shall come into force on 13th February 2003. Interpretation 2.In these Regulations -
Criteria for accreditation 3.For the purposes of paragraph 4(2)(b) of Part 2 of Schedule 16 to the Finance Act 2002 the criteria to be satisfied for accreditation are specified in Part 2 (Application and Criteria for Accreditation) of the Material Concerning the Accreditation of Community Development Finance Institutions published by the Secretary of State. Notification of accreditation or refusal 4.The Secretary of State must give notice to a body of the grant of an accreditation specifying the date of the grant of accreditation and the date on which the period of accreditation begins. 5.The Secretary of State must give notice to a body of a refusal to grant accreditation specifying the date of the refusal and the reasons for the refusal. 6.An accreditation is subject to the terms set out in this Part. Publication of details 7. - (1) It is a term of accreditation that the CDFI agrees to the publication of the information specified in paragraph (2) in a list which the Secretary of State may publish from time to time. (2) The information specified for the purpose of paragraph (1) is -
(b) the business address of the CDFI; (c) the name of an individual who may be contacted at the CDFI; (d) the date the CDFI was granted accreditation; and (e) an outline of the aims and business operations of the CDFI. (3) The CDFI must give notice to the Secretary of State of -
(b) any material change to the information specified in subparagraph (e) of paragraph (2), within 30 days of the relevant change.
(b) on or before the second anniversary of the accreditation date, at least 50% of the amount of the investment fund is invested in relevant investments in qualifying enterprises; and (c) on or before the third anniversary of the accreditation date and at all times thereafter, at least 75% of the amount of the investment fund is invested in relevant investments in qualifying enterprises. Meaning of the "investment fund"
B is any amount payable by the CDFI at the relevant date or at any time during the three months following the relevant date to repay, redeem or buy-back the capital element of any qualifying investment; C is the amount of any investment made by the CDFI from the investment fund which has been written-off in accordance with generally accepted accounting practice. (2) For the purpose of paragraph (1) where a qualifying investment is a loan which authorises the CDFI to draw down amounts of the loan over a period of time, the amount of the qualifying investment is the amount drawn down at the relevant date.
(b) the CDFI can demonstrate that at the time the investment in the enterprise was made the enterprise was unable to obtain finance from other sources; and (c) the enterprise falls within one of the following Cases. Case 1
(ii) employment; (iii) health, deprivation and disability; (iv) education, skills and training; (v) geographical access to services, and (vi) housing, can demonstrate has a level of disadvantage comparable to those identified in Annex A of the Material Concerning the Accreditation of Community Development Finance Institutions published by the Secretary of State. Case 3
(b) an issue of securities of or shares in the enterprise, for which the CDFI has subscribed, is made to the CDFI. (2) For the purposes of paragraph (1)(a) -
(ii) the CDFI subscribes for or otherwise acquires securities of the enterprise; (b) where the loan agreement authorises the enterprise to draw down amounts of the loan over a period of time the loan is treated as made at the time when the first amount is drawn down. (3) For the purpose of these Regulations where a relevant investment is a loan within paragraph (2)(b) the amount of the relevant investment is the amount drawn down at a given date.
(b) the Investment Director does not approve the increase in accordance with paragraph (2), the Investment Director may treat all or some of the investments made by the CDFI after the date on which the qualifying investments exceed the 125% limit as not being relevant investments for the purposes of regulation 8 up to an amount equal to the amount by which the qualifying investments exceed the 125% limit.
(b) subject to paragraph (2), on such other date coincident with the CDFI's reporting cycle and agreed with the Small Business Service. (2) The first annual report made by the CDFI must be made no later than 18 months after the date accreditation was granted. Withdrawal of accreditation 15. - (1) The Secretary of State must withdraw the CDFI's accreditation -
(b) subject to paragraph (2), where the CDFI makes a direct or indirect investment in residential property from the investment fund; and (c) subject to paragraph (3), where the CDFI fails to make an annual report within 12 months of the date on which it was due under paragraph (1) of regulation 13. (2) Paragraph (1)(b) does not apply where -
(b) the CDFI divested itself of the investment within three months of -
(ii) the date of receipt of a notice from the Small Business Service that the investment is in residential property, whichever is the earlier. (3) Paragraph (1)(c) does not apply if in the opinion of the Investment Director the CDFI had reasonable excuse for failing to make an annual return.
(b) within 30 days of the date of the notification of the refusal under regulation 5 or the withdrawal under regulation 15(4), and (c) to the Investment Director. (3) The notice of appeal must require the Investment Director to transmit to the Special Commissioners -
(b) in an appeal against a withdrawal of accreditation, the notice under regulation 15(4) together with any information or particulars prepared by the Small Business Service leading to the issue of that notice. (4) The Special Commissioners may allow the appeal and -
(b) in an appeal against a withdrawal of accreditation, direct that the withdrawal was ineffective. (5) The decision of the Special Commissioners shall be final. General Investments 1.Any investment which benefits directly or indirectly from the security offered by a Phoenix Fund guarantee or by any similar publicly-funded underwriting or guarantee arrangement. 2. - (1) Any loan to a profit-distributing enterprise -
(b) as a consequence of which, and for so long as, the total amount of loans to that enterprise exceeds Ј100,000 ("the Ј100,000 limit"). (2) Where the Ј100,000 limit is exceeded -
(b) in any other circumstances where it is not possible to establish which loan caused the limit to be exceeded, the Investment Director shall determine which of those loans shall not constitute relevant investments so that the amount of relevant investments in the enterprise approximates to but does not exceed the Ј100,000 limit.
(b) projects which benefit charities and other non-profit distributing bodies which are engaged entirely in public functions, non-competitive and non-commercial activity, or (c) projects which are commercial in the sense that there is remuneration for the service provider and competition for their supply, but which are small-scale and purely local in nature. (3) Where the Ј250,000 limit is exceeded -
(b) in any other circumstances where it is not possible to establish which loan or investment caused the limit to be exceeded, the Investment Director shall determine which of those loans or investments shall not constitute relevant investments so that the amount of relevant investments in the enterprise approximates to but does not exceed the Ј250,000 limit.
(b) thereafter, the immediately preceding anniversary of the accreditation date. 6. - (1) Any investment in an enterprise within Case 2 of regulation 10 as a consequence of which, and for so long as -
(b) the number of investments out of the investment fund by the CDFI in enterprises in Case 2 exceeds the number of investments in enterprises within Cases 1 and 3. (2) For the purposes of paragraph (1) an investment in an enterprise which is within both Case 2 and Case 3 shall be treated as being only within Case 3.
(b) the total amount of investment within Case 2 below exceeds one half of the relevant investments within Case 1. Case 1
(b) thereafter, the immediately preceding anniversary of the accreditation date. 10.Any investment by a retail community investment finance institution in a body other than a CDFI whose objective is to provide finance for enterprises in or for disadvantaged communities as a consequence of which, and for so long as, the total amount of investment in such enterprises exceeds Ј250,000.
(ii) thereafter, the immediately preceding anniversary of the accreditation date, or (b) Ј2,500,000 whichever is the lesser amount. (This note is not part of the Regulations) Schedules 16 and 17 of the Finance Act 2002 provide for tax relief for investments made by individuals and companies in bodies which are accredited as community development finance institutions ("CDFIs"). The relief is called community investment tax relief. CDFIs are bodies which invest in enterprises for disadvantaged communities. These Regulations make provision for the accreditation of such bodies. Part 1 contains regulation 1 and 2. Regulation 1 provides for citation and commencement, and regulation 2 for interpretation. Part 2 contains regulations 3 to 5 which provide for applications and criteria for accreditation. Regulation 3 provides for criteria to be satisfied for accreditation by reference to the Community Investment Tax Relief, Material Concerning the Accreditation of Community Development Finance Institutions published by the Secretary of State for Trade and Industry on 15th January 2003, which can be found at www.sbs.gov.uk/finance/citr.php. Regulations 4 and 5 provide for notification of the grant of accreditation and refusal to grant accreditation. Part 3 contains regulations 6 to 14 and set out the terms and conditions of accreditation. Regulation 7 provides for the publication by the Secretary of State of specified information in relation to the CDFI. Regulation 8 sets out the amount of the investment fund to be invested by the CDFI in relevant investments in qualifying enterprises at the first, second and third anniversaries of accreditation and at all times thereafter. Regulation 9 gives the meaning of the "investment fund". Regulation 10 gives the meaning of "qualifying enterprise"; the geographic areas referred to in Case 1 are identified in Annex A of the Material Concerning the Accreditation of Community Development Finance Institutions published by the Secretary of State for Trade and Industry. The Government recognised measures of disadvantage referred to in Case 2 are set out in Annex A of the Material Concerning the Accreditation of Community Development Finance Institutions. Regulation 11 gives the meaning of "relevant investment" and provides that the investments specified in Schedule 1 are not relevant investments. Regulation 12 provides for instances where the qualifying investments in the CDFI will exceed 125% of the amount of qualifying investments stated in the CDFI's application for accreditation. Regulation 13 sets out the reporting requirements. The form of the annual report provided by the Secretary of State for this purpose can be found at Annex C of the Material Concerning the Accreditation of Community Development Finance Institutions. Regulation 14 sets out the requirements for the CDFI to issue a tax relief certificate. Part 4 contains regulations 15 and 16. Regulation 15 provides for the withdrawal of accreditation. Regulation 16 provides for appeals against refusals to grant accreditation and withdrawals of accreditation. Schedule 1 sets out investments which are not relevant investments. Notes: [1]2002 c. 23.back [2]2000 c. 17.back ISBN0 11 044684 4 -- Back--
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