Movement of assetsU.K.
555Assets: change of useU.K.
(1)Subsection (2) applies if—
(a)an asset has been used wholly and exclusively for the purposes of property rental business of a company which is, or is a member of, a UK REIT, and
(b)the asset begins to be used (otherwise than by being disposed of in the course of trade) wholly and exclusively for the purposes of residual business of the company.
(2)The asset is treated as having been at that time—
(a)disposed of by the company so far as it carries on property rental business, and
(b)immediately reacquired by the company so far as it carries on residual business.
(3)The sale and reacquisition deemed under subsection (2) is to be treated as being for a consideration equal to the market value of the asset.
(4)For the purposes of CAA 2001—
(a)a sale and reacquisition deemed under subsection (2)—
(i)does not give rise to allowances or charges, and
(ii)does not make it possible to make an election under section 198 or 199 of that Act (apportionment),
(b)subsection (3) does not apply, and
(c)anything done by or to the company so far as it carries on property rental business before the deemed sale and reacquisition is to be treated after the deemed sale and reacquisition as having been done by or to the company so far as it carries on residual business.
(5)If a percentage of the gains of property rental business of a member of a group UK REIT is excluded from a financial statement in accordance with section 533(3), that percentage of those gains is to be treated for corporation tax purposes as gains of the member's residual business.
(6)This section has effect in relation to a non-UK member of a group UK REIT as if references to property rental business were references to UK property rental business.
(7)Section 535 is relevant to the tax treatment of any gain arising to a company under this section.
556Disposal of assetsU.K.
(1)Subsection (2) applies if—
(a)an asset has been used wholly and exclusively for the purposes of property rental business of a company which is, or is a member of, a UK REIT, F1...
(b)the asset is disposed of in the course of trade for the purposes of residual business of the company[F2, and
(c)if the company is a member of a UK REIT, the disposal is not to another member of the UK REIT.]
(2)If this subsection applies—
(a)the deemed sale and reacquisition under section 536(2) is to be ignored, and
(b)the asset is to be treated as having been disposed of in the course of the company's residual business.
(3)Subsection (2) is to be taken to apply in particular if—
(a)a property acquired by a company which is, or is a member of, a UK REIT 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 later, F3...
(c)the company disposes of the property within the period of 3 years beginning with the completion of the development[F4, and
(d)if the company is a member of a UK REIT, the disposal is not to another member of the UK REIT.]
F5(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)If a percentage of the gains of property rental business of a member of a group UK REIT is excluded from a financial statement in accordance with section 533(3), that percentage of those gains is to be treated for corporation tax purposes as gains of the member's residual business.
(6)This section has effect in relation to a non-UK member of a group UK REIT as if references to property rental business were references to UK property rental business.
(7)Section 535 is relevant to the tax treatment of any gain arising to a company under this section.
Textual Amendments
F1Word in s. 556(1) omitted (with effect in accordance with Sch. 4 para. 44 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 4 para. 43(2)(a)
F2S. 556(1)(c) and preceding word inserted (with effect in accordance with Sch. 4 para. 44 of the amending Act) by Finance Act 2012 (c. 14), Sch. 4 para. 43(2)(b)
F3Word in s. 556(3) omitted (with effect in accordance with Sch. 4 para. 44 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 4 para. 43(3)(a)
F4S. 556(3)(d) and preceding word inserted (with effect in accordance with Sch. 4 para. 44 of the amending Act) by Finance Act 2012 (c. 14), Sch. 4 para. 43(3)(b)
F5S. 556(4) omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 4 para. 35(1) (with Sch. 4 para. 35(2))
557Movement of assets into ring fenceU.K.
(1)Subsection (2) applies if—
(a)an asset has been used wholly and exclusively for the purposes of residual business of a company which is, or is a member of, a UK REIT, and
(b)the asset begins to be used wholly and exclusively for the purposes of the company so far as it carries on property rental business.
(2)The asset is to be treated as having been at that time—
(a)disposed of by the company so far as it carries on residual business, and
(b)immediately reacquired by the company so far as it carries on property rental business.
(3)The sale and reacquisition deemed under subsection (2) is to be treated as being for a consideration equal to the market value of the asset.
(4)For the purposes of CAA 2001—
(a)a sale and reacquisition deemed under subsection (2)—
(i)does not give rise to allowances or charges, and
(ii)does not make it possible to make an election under section 198 or 199 of that Act (apportionment),
(b)subsection (3) does not apply, and
(c)anything done by or to the company so far as it carries on residual business before the deemed sale and reacquisition is to be treated after the deemed sale and reacquisition as having been done by or to the company so far as it carries on property rental business.
(5)If a percentage of the gains of property rental business of a member of a group UK REIT is excluded from a financial statement in accordance with section 533(3), that percentage of those gains is to be treated for corporation tax purposes as gains of the member's residual business.
(6)This section has effect in relation to a non-UK member of a group UK REIT as if references to property rental business were references to UK property rental business.
(7)Section 535 is relevant to the tax treatment of any gain arising to a company under this section.