Finance Act 2022

Requirements for financial statements U.K.

3 (1) In section 531 (conditions as to balance of business)—

(a) in subsection (2)—

(i) in paragraph (a) omit “(as shown in the financial statement under section 532(2)(a))”;

(ii) in paragraph (b) omit “(as shown in the financial statement under section 532(2)(c))”;

(b) after subsection (2) insert—

“(2A) Where the matters mentioned in section 533(1)(a) to (ca) must be specified in a financial statement under section 532(2)(a) or (c) in relation to each member of a group (see section 533(1C))—

(a) the reference in subsection (2)(a) to the profits of property rental business of members of the group are to those profits as shown in the financial statement under section 532(2)(a), and

(b) the reference in subsection (2)(b) to the profits of residual business of members of the group are to those profits as shown in the financial statement under section 532(2)(c).”;

(c) in subsection (6), in the words before paragraph (a), after “group” insert “, where the matters mentioned in section 533(1)(d) must be specified in a financial statement under section 532(2)(a) and (c) in relation to each member of the group (see section 533(1G))”.

(2) In section 533 (financial statements: supplementary)—

(a) in subsection (1)—

(i) in the words before paragraph (a), omit “each member of”;

(ii) omit the “and” at the end of paragraph (c);

(iii) after paragraph (c) insert—

“(ca) the items specified in section 531(4)(b) to (d), and”;

(iv) in paragraph (d), in the words before sub-paragraph (i), after “assets” insert “, including assets within subsection (1ZA),”;

(b) after subsection (1) insert—

“(1ZA) Assets are within this subsection if they are held solely—

(a) in connection with the items mentioned in section 531(4)(b) and (c), or

(b) as a result of compliance with planning obligations entered into as mentioned in section 531(4)(d).”;

(c) after subsection (1A) insert—

“(1B) Subsection (1C) applies where in the accounting period for which statements are prepared under section 532(2) profits of the group’s property rental business are less than 80% of the sum of—

(a) the profits of property rental business of the group, and

(b) the profits of residual business of the group.

(1C) In addition to being specified in relation to the group, the matters mentioned in subsection (1)(a) to (ca) must be specified in a financial statement under section 532(2)(a) or (c) in relation to each member of the group.

(1D) For the purposes of establishing whether subsection (1C) applies—

(a) the references to profits in subsection (1B) are to profits determined in the same way as profits are determined in accordance with section 531(4);

(b) any expenses relating to both property rental business and residual business are to be apportioned on a just and reasonable basis.

(1E) Where the effect of subsections (1B) and (1C) is that there is no requirement to specify in a financial statement for an accounting period under section 532(2)(a) or (c) the matters mentioned in subsection (1)(a) to (ca) in relation to each member of a group, it is to be assumed that the group meets condition A in section 531(1) in relation to that accounting period.

(1F) Subsection (1G) applies where, at the beginning of the accounting period for which statements are prepared under section 532(2), the sum of—

(a) the value of the assets relating to property rental business, and

(b) the value of the assets relating to residual business so far as consisting of cash or relevant UK REIT shares,

is less than 80% of the total value of assets held by the group.

(1G) In addition to being specified in relation to the group, the matters mentioned in subsection (1)(d) must be specified in a financial statement under section 532(2)(a) or (c) in relation to each member of the group.

(1H) For the purposes of establishing whether subsection (1G) applies, references to assets in subsection (1F) are to the assets excluding—

(a) assets held solely in connection with the items mentioned in section 531(4)(b) and (c), and

(b) assets held solely as a result of compliance with planning obligations entered into as mentioned in section 531(4)(d).

(1I) Where the effect of subsections (1F) and (1G) is that there is no requirement to specify in a financial statement for an accounting period under section 532(2)(a) or (c) the matters mentioned in subsection (1)(d) in relation to each member of a group, it is to be assumed that the group meets condition B in section 531(5) in relation to that accounting period.”