Part 12

Real Estate Investment Trusts
Chapter 4

Entering the UK REIT regime

Effects of entry: corporation tax
536
1
Property rental business carried on before entry by a company which becomes, or becomes a member of, a UK REIT (an “incoming company”) is to be treated for corporation tax purposes as ceasing at entry.
2
Assets which immediately before entry are involved in property rental business of an incoming company are to be treated for corporation tax purposes as being—
a
sold by the pre-entry company immediately before entry, and
b
reacquired immediately after entry 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 assets.
4
A gain accruing as a result of subsection (2) is not a chargeable gain.
5
For corporation tax purposes, one accounting period of an incoming company ends on entry and a new one begins.
6
In the case of a group UK REIT—
a
if a percentage of the assets of a member of the group is excluded from a financial statement in accordance with section 533(3), that percentage of those assets is to be ignored in the application of subsection (2) to the member, and
b
this section has effect in relation to a non-UK member of the group as if references to property rental business were references to UK property rental business of the member.
7
This section does not apply if—
a
a company which was a member of one group UK REIT becomes a member of a different group UK REIT, or
b
a company which was a company UK REIT becomes a member of a group UK REIT.
8
This section and section 537 are subject to section 559 (demergers: company leaving group UK REIT).
9
For the meaning of “entry”, see section 607(1).