Explanatory Notes

Corporation Tax Act 2010

2010 CHAPTER 4

3 March 2010


Part 12: Real Estate Investment Trusts

Chapter 2: Requirements for being a UK REIT
Section 523: Notice for a group of companies to become a UK REIT

1612.This section provides that, in order to be a “group UK REIT”, the principal company of the group must give notice of entering the UK REIT regime. It is based on sections 106, 109 and 134 of, and paragraphs 5(1) and 8(1) of Schedule 17 to, FA 2006.

1613.Subsections (1) and (2) provide that a group of companies may give notice for the UK REIT regime to apply from a specified date. If a group notice is given, all 75% subsidiaries of the group (as defined in section 606) are included in the UK REIT regime. A new accounting period of each company in the group starts on the specified date (see section 536(5)). That new accounting period is called “accounting period 1” – see section 609.

1614.Subsection (3) provides that the principal company of a group may give notice only if it is a “UK company” as defined in section 521 and it is not an OEIC.

1615.It is unclear from the source legislation (in particular sections 106(2), 107(1) and 108(1) of FA 2006) whether a group becomes a UK REIT from the date specified in a section 109 of FA 2006 notice or when the various conditions set out in sections 106(2), 107(1) and 108(1) of FA 2006 are satisfied. Subsection (4) addresses this by making it clear that a group becomes a UK REIT from the date specified in the notice given under this section.

1616.Subsection (5) defines“group UK REIT” as being a group which has given notice under this section.

1617.Section 103(3) of FA 2006, which provides that “a company or group to which this Part applies may be referred to as a Real Estate Investment Trust”, is not rewritten as this expression is not used elsewhere in the legislation.

1618.Subsection (6) makes clear that merely giving a notice is not enough: the group must also meet the conditions in section 527.