http://www.legislation.gov.uk/id/ukpga/2006/25

Part 4Real Estate Investment Trusts

Assets etc

113Ring-fencing of tax-exempt business

1

For the purposes of corporation tax, the business of C (tax-exempt) shall be treated as a separate business (distinct from—

a

any business carried on by C (pre-entry),

b

any business carried on by C (residual), and

c

any business carried on by C (post-cessation)).

2

For the purposes of corporation tax C (tax-exempt) shall be treated as a separate company (distinct from—

a

C (pre-entry),

b

C (residual), and

c

C (post-cessation)).

3

In particular—

a

a loss incurred by C (tax-exempt) may not be set off against profits of C (residual),

b

a loss incurred in respect of C (residual) may not be set off against profits of C (tax-exempt),

c

a loss incurred in respect of C (pre-entry) may not be set off against profits of C (tax-exempt) (but this section does not prevent a loss of that kind from being set off against profits of C (residual)),

d

a loss incurred by C (tax-exempt) may not be set off against profits arising to C (post-cessation) (in respect of business of any kind), and

e

receipts accruing after entry but relating to business of C (pre-entry) shall not be treated as receipts of C (tax-exempt).

4

In subsection (3) a reference to a loss includes a reference to a deficit, expense, charge or allowance.

5

Section 392B of ICTA (ring-fencing of losses from overseas property business) shall not apply to business of C (tax-exempt).

6

Paragraphs 5B and 5C of Schedule 28AA to ICTA (transfer pricing: exemption for small and medium enterprises) shall not apply to a company to which this Part applies (whether to C (tax-exempt) or to C (residual)).