Finance Act 2006

Valid from 19/07/2006

Entering Real Estate Investment Trust Regime U.K.

8 (1) A notice under section 109 must be given by the principal company. U.K.

(2) For the purposes of the requirement under section 109(2)(c) a reference to the company shall be treated as a reference to the principal company.

9 (1) In section 111(1) a reference to C (pre-entry) shall be treated as a reference to a UK resident member of G (pre-entry). U.K.

(2) Section 111(2) shall have effect in relation to each UK resident company which is a member of the group; and for that purpose—

(a) a reference to C (pre-entry) (in subsection (2) or (4)) shall be treated as a reference to the company as a member of G (pre-entry), and

(b) a reference to C (tax-exempt) (in subsection (2) or (4)) shall be treated as a reference to the company as a member of G (property rental business).

(3) In section 111(5) the reference to the company shall be treated as a reference to each UK resident member.

(4) Where a percentage of the assets of a member of G (property rental business) is excluded from a financial statement in accordance with paragraph 31(5), the excluded percentage shall be disregarded for the purposes of section 111.

10 (1) If a UK resident company becomes a member of a group to which Part 4 applies, section 111 shall apply to the company as if— U.K.

(a) references to entry were references to becoming a member of the group,

(b) references to C (pre-entry) were references to the company before becoming a member of the group, and

(c) references to C (tax-exempt) were references to the company as a member of G (property rental business).

(2) Where a percentage of the assets of the company would be excluded from a financial statement in accordance with paragraph 31(5), the percentage which would be excluded shall be disregarded in applying section 111 to the company.

11 (1) In the application of section 112— U.K.

(a) a reference to a company to which Part 4 applies shall be treated as a reference to each member of a group to which Part 4 applies,

(b) a reference to C (residual) shall be treated as a reference to the company as a member of G (residual),

(c) in subsection (3) the reference to assets treated as sold and re-acquired under section 111(2) shall be construed in accordance with paragraph 9(4) or 10(2), and

(d) the section shall apply to non-UK resident members—

(i) as if section 111 applied to UK property rental business (within the meaning given by paragraph 32(1)) carried on by them,

(ii) as if a reference to a charge to corporation tax under Case VI of Schedule D were a reference to a charge to income tax, and

(iii) as if a reference to the rate at which the company pays tax on income were, where relevant, a reference to the rate at which the company would pay tax on the notional income if it were the highest part of the company's income.

(2) Where a company joins a group to which Part 4 applies, section 112 shall apply to the company as if joining the group amounted to becoming a company to which Part 4 applies (but with a reference to C (residual) being treated as a reference to the company as a member of G (residual)).

12 (1) Section 113(1) to (4) shall apply in relation to G (property rental business), G (pre-entry), G (residual) and G (post-cessation) as they apply in relation to C (tax-exempt), C (pre-entry), C (residual) and C (post-cessation). U.K.

(2) Section 113(1) to (6) shall also apply in relation to each UK resident company which is a member of the group; for which purpose—

(a) a reference to C (tax-exempt) is a reference to the company if or in so far as it is a member of G (property rental business),

(b) a reference to C (pre-entry) is a reference to the company as a member of G (pre-entry) (or, in the case of a company which joins a group to which Part 4 applies, a reference to the company before joining),

(c) a reference to C (residual) is a reference to the company if or in so far as it is a member of G (residual), and

(d) a reference to C (post-cessation) is a reference to the company as a member of G (post-cessation) (or, in the case of a company which leaves a group to which Part 4 applies, a reference to the company after leaving).

(3) Where a percentage of the profits of a member of G (property rental business) is excluded from a financial statement in accordance with paragraph 31(5), the excluded percentage shall be treated for the purposes of section 113 as profits of G (residual).

13 U.K. Regulations under section 114 may make provision in relation to a group to which Part 4 applies as if references to the company were references to the principal company.

14 Section 115 shall apply as if for subsection (2) there were substituted—

“(2) That sum is—

where—

a

Profits means the aggregate of the UK profits of G (property rental business) arising in the accounting period as set out in the financial statement under paragraph 31(2)(b) (before the offset of capital allowances),

b

Financing Costs (all) means the amount of the financing costs incurred in respect of the property rental business of G (property rental business) as set out in the financial statement under paragraph 31(2)(b), and

c

Financing Costs (external) means the amount of the financing costs incurred in respect of the UK business of G (property rental business), excluding financing costs owed by one member of G (property rental business) to another, as set out in the financial statement under paragraph 31(2)(a).”