BECOMING A UK-REIT 33
APPENDIX C: BREACHING THE UK-REIT REGIME CONDITIONS
ADMITTED TO TRADING CONDITIONS RELATING TO SHARES Takeover of one UK-REIT by another***
CLOSE COMPANY
THREE PROPERTY
40% PROPERTY VALUE
DISTRIBUTION 75% ASSET TEST
75% PROFIT TEST
Breach does not result in exit from regime
1. Takeover of one UK-REIT by
A single breach should not result
Only if not a necessary
Any breach*
Up to two breaches in a ten year period provided ratio remains above 50% End of next accounting period after start of initial breach Measured by reference to accounting periods
Up to two breaches in a ten year period provided ratio remains above 50% End of next accounting period after start of initial breach Measured by reference to accounting periods
another*** 2. Actions of
consequence of breaching ‘three property’ rule
in exit from regime (see below)
someone other than company
Time allowed to rectify breach to avoid penalty
n/a
1. n/a 2. End of next accounting period
By end of next accounting period
By end of next accounting period
Three months after tax liability finally determined **
Length of a ‘single breach’
n/a
n/a
Up to end of next
Up to end of next
Measured by reference to accounting period
accounting period after start of initial breach
accounting period after start of initial breach
Number allowed in a ten year period
n/a
1. n/a 2. No limit
Two
Two
Any number
Two
Two
Source: Based on HMRC guidance as amended for changes enacted since guidance published. * Tax charge is levied on UK-REIT on deemed income equal to shortfall in distribution. ** Applies only where the shortfall is the result of an increase in the finally agreed profits of the property rental business compared with the amounts shown on the tax return. *** If a breach occurs as the result of being taken over by another UK-REIT, the group can remain in the regime despite breaching either of these conditions.
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