Finance Act 2012

Being a UK REIT: conditions for company - trading of shares on recognised stock exchange U.K.

14 U.K. In section 527 (being a UK REIT in relation to an accounting period) in subsections (2) and (3) after paragraph (a) insert—

“(aa) the condition in section 528A (further condition relating to shares) must be met in relation to the period,”.

15 U.K. In section 528 (conditions for company) in subsection (3) for “listed” substitute “ admitted to trading ”.

16 U.K. After section 528 insert—

“528A Further condition relating to shares

(1) In the case of a group UK REIT, the condition in this section is met in relation to an accounting period if—

(a) throughout the accounting period, the shares forming the principal company's ordinary share capital meet the requirement of section 1137(2)(b) (definition of “listed” in relation to shares), or

(b) during the accounting period, shares forming part of the principal company's ordinary share capital are traded on a recognised stock exchange.

(2) In the case of a company UK REIT, the condition in this section is met in relation to an accounting period if—

(a) throughout the accounting period, the shares forming the company's ordinary share capital meet the requirement of section 1137(2)(b) (definition of “listed” in relation to shares), or

(b) during the accounting period, shares forming part of the company's ordinary share capital are traded on a recognised stock exchange.

(3) This section is subject to section 528B.

528B Relaxation of section 528A condition for accounting periods 1 to 3

(1) This section relaxes the requirements of section 528A in relation to accounting period 1, accounting period 2 and accounting period 3.

(2) In the case of a group UK REIT, the condition in section 528A is met in relation to accounting period 1, accounting period 2 and accounting period 3 if—

(a) at the end of the relevant period, the shares forming the principal company's ordinary share capital meet the requirement of section 1137(2)(b) (definition of “listed” in relation to shares), or

(b) during the relevant period, shares forming part of the principal company's ordinary share capital are traded on a recognised stock exchange.

(3) In the case of a company UK REIT, the condition in section 528A is met in relation to accounting period 1, accounting period 2 and accounting period 3 if—

(a) at the end of the relevant period, the shares forming the company's ordinary share capital meet the requirement of section 1137(2)(b) (definition of “listed” in relation to shares), or

(b) during the relevant period, shares forming part of the company's ordinary share capital are traded on a recognised stock exchange.

(4) In this section—

• “accounting period 2” means the accounting period following accounting period 1,

• “accounting period 3” means the accounting period following accounting period 2, and

• “the relevant period” means the period consisting of accounting period 1, accounting period 2 and accounting period 3.”

17 U.K. In section 561 (notice of breach of relevant Chapter 2 condition) in subsection (3) before “conditions A and B in section 529” insert—

“the condition in section 528A (further condition relating to shares),”.

18 U.K. Before section 563 insert—

“562B Breach of further condition relating to shares

(1) Subsection (2) applies if the condition in section 528A (further condition relating to shares) is not met in relation to an accounting period.

(2) The group or company (as the case may be) is to be treated as having ceased to be a UK REIT at the end of the previous accounting period.

(3) But subsection (2) does not apply if the condition is not met as a result of—

(a) the principal company of a group UK REIT becoming a member of another group UK REIT, or

(b) a company UK REIT becoming a member of a group UK REIT,

and, accordingly, the breach is to be ignored.

(4) This section is subject to section 562C.

562C Breach of further condition relating to shares in accounting periods 1, 2 and 3

(1) Subsection (2) applies if the condition in section 528A, as relaxed by section 528B, is not met in relation to accounting period 1, accounting period 2 and accounting period 3.

(2) The group or company (as the case may be) is to be treated as having ceased to be a UK REIT at the end of accounting period 2.

(3) But subsection (2) does not apply if the condition, as relaxed, is not met as a result of—

(a) the principal company of a group UK REIT becoming a member of another group UK REIT, or

(b) a company UK REIT becoming a member of a group UK REIT,

and, accordingly, the breach is to be ignored.

(4) In this section “accounting period 2” and “accounting period 3” have the same meaning as in section 528B.”

19 (1) Section 572 (termination by notice given by HMRC) is amended as follows. U.K.

(2) In subsection (2) before “574” insert “ 573B, ”.

(3) Before subsection (6) insert—

“(5B) Subsection (4)(a) has effect subject to section 573B(9).”

20 U.K. Before section 574 insert—

“573B Notice under section 572: further condition relating to shares not met

(1) In the case of a group UK REIT, an officer of Revenue and Customs may give a notice under section 572(1) if—

(a) the condition in section 528A (further condition relating to shares) would not be met in relation to an accounting period (“the relevant accounting period”) but for section 528B, and

(b) subsection (2) applies to a company which is a member of the group at any time during the relevant accounting period.

(2) This subsection applies to a company if it has benefited from the relaxation of the condition in section 528A in relation to 3 or more accounting periods (apart from the relevant accounting period).

(3) In the case of a company UK REIT, an officer of Revenue and Customs may give a notice under section 572(1) if—

(a) the condition in section 528A (further condition relating to shares) would not be met in relation to an accounting period (“the relevant accounting period”) but for section 528B, and

(b) the company has benefited from the relaxation of the condition in section 528A in relation to 3 or more accounting periods (apart from the relevant accounting period).

(4) For the purposes of this section a company benefits from the relaxation of the condition in section 528A if—

(a) it is a member of a group UK REIT at any time during an accounting period in relation to which the condition in section 528A would not be met but for section 528B, or

(b) at any time it is a company UK REIT and the condition in section 528A would not be met in relation to an accounting period but for section 528B,

and the accounting period “in relation to” which the company benefits from the relaxation of the condition in section 528A is the accounting period mentioned in paragraph (a) or (b) (as the case may be).

(5) None of subsections (1)(a), (3)(a), (4)(a) and (4)(b) covers cases in which the condition in section 528A would not be met as a result of—

(a) the principal company of a group UK REIT becoming a member of another group UK REIT, or

(b) a company UK REIT becoming a member of a group UK REIT.

(6) Subsection (7) applies if—

(a) a company ceases to carry on a business (“the transferred business”) which it carried on at any time during an accounting period in relation to which the company benefits from the relaxation of the condition in section 528A, and

(b) another company (“company X”) begins to carry on the transferred business.

In paragraph (a) the reference to a business includes a part of a business.

(7) The following companies are to be taken to benefit from the relaxation of the condition in section 528A in relation to the accounting period in question—

(a) company X, and

(b) if company X subsequently ceases to carry on the transferred business (or any part of it), any other companies which from time to time carry on the transferred business (or any part of it).

(8) If a notice is given under section 572(1) in a case within this section, subsection (9) applies instead of section 572(4)(a).

(9) The group or company (as the case may be) is to be taken to have ceased to be a UK REIT on—

(a) the first day of accounting period 1, or

(b) such later day as may be specified by the officer of Revenue and Customs in the notice.”

21 (1) Subject to what follows, the amendments made by paragraphs 14 to 20 have effect for accounting periods beginning on or after the day on which this Act is passed. U.K.

(2) Sections 528B, 562C and 573B have no effect in relation to—

(a) groups of companies in respect of which notices are given under section 523 specifying a date which is before the day on which this Act is passed, or

(b) companies which give notices under section 524 specifying a date which is before the day on which this Act is passed.