Part 4Real Estate Investment Trusts
Capital gains
125Movement of assets out of ring-fence
1
Subsection (2) applies when an asset which has been used wholly and exclusively for the purposes of the business of C (tax-exempt) begins to be used (otherwise than by being disposed of in the course of trade) wholly and exclusively for the purposes of the business of C (residual).
2
The asset shall be treated as having been at that time—
a
disposed of by C (tax-exempt), and
b
immediately re-acquired by C (residual).
3
The sale and re-acquisition deemed under subsection (2) shall be treated as being for a consideration equal to the market value of the asset.
4
For the purposes of CAA 2001—
a
the sale and re-acquisition deemed under subsection (2)—
i
shall not give rise to allowances or charges, and
ii
shall not make it possible to make an election under section 198 or 199 of that Act (apportionment),
b
subsection (3) above shall not apply, and
c
anything done by or to C (tax-exempt) before the deemed sale and re-acquisition shall be treated after the deemed sale and re-acquisition as having been done by or to C (residual).
5
Subsection (6) applies when an asset which has been used wholly and exclusively for the purposes of the business of C (tax-exempt) is disposed of in the course of trade for the purposes of the business of C (residual).
6
Where this subsection applies—
a
the deemed sale and re-acquisition under section 111(2) shall be disregarded, and
b
the asset shall be treated as having been disposed of in the course of the business of C (residual).
7
Subsection (6) shall be taken to apply, in particular, where—
a
a property acquired by a company to which this Part applies has been developed since acquisition,
b
the cost of the development exceeds 30% of the fair value of the property (determined in accordance with international accounting standards) at entry or at acquisition, whichever is the later, and
c
the company disposes of the property within the period of three years beginning with the completion of the development.
8
Where subsection (6) applies in relation to an asset held at entry, the company may make a claim for repayment of a proportion of the tax paid under section 112 calculated as follows—
where—
- a
Asset Market Value means market value of the asset at entry,
- b
Aggregate Market Value means the aggregate market value of assets treated as sold and re-acquired under section 111(2) (ignoring any asset of negative market value), and
- c
Tax Paid means tax paid under section 112.