With the increasing penetration of renewable energy sources and inclusion of additional features, the electrical networks have become more active. Every passing decade has seen newer features of the electrical network and with the emerging Smart Grid, distribution systems becomes active. Grid tied inverters are vital component of active distribution systems, acting as interfaces for the distributed generators. This paper presents Model Predictive Control (MPC) of a multifunctional inverter used for power quality compensation of non-linear local loads and grid integration of solar photovoltaic generators. By including the discrete nature of the switches in the power converter, the optimisation problem of MPC The reference current for the converter control is generated using Instantaneous Power theory. The control is simulated in MATLAB/SIMULINK.