EXPLANATORY NOTE
(This note is not part of the Regulations)
The Regulations make provision in relation to Real Estate Investment Trusts.
Regulation 1 provides for citation, commencement and effect.
Regulations 2 make amendments to Part 12 of the Corporation Tax Act 2010 which sets out the Real Estate Investment Trusts legislation. Paragraph (2) amends section 528 which sets out conditions which must be met by a company to enter the regime. Condition D in section 528 is that a REIT cannot be a close company but the shareholding of an institutional investor will not, on its own, make a company close for these purposes, subsection (4A) defines what an institutional investor is for these purposes. Regulation 2(2) amends Section 528(4A) to include UK REITs and overseas entities which are equivalent to UK REITs in the list of institutional investors.
Regulation 2(2) amends section 544(5) to include amounts in relation to hedging risks of borrowing in the list of items to be taken into account in calculating the costs of debt finance for the purposes of determining property financing costs in the profit: financing-cost ratio.
Regulation 3 makes consequential amendments to regulation 69F of, and the Schedule to, the Authorised Investment Funds (Tax) Regulations 2006 to align the reference to overseas entities which are equivalent to UK REITs with the equivalent reference in section 528(4A)(j) in the Corporation Tax Act 2010, update references to that Act and include a definition of that Act.
A Tax Information and Impact Note covering this instrument will be published on the HMRC website at http://www.hmrc.gov.uk/thelibrary/tiins.htm