UK REITs—anti-avoidance
Produced in partnership with Martin Shah of Simmons & Simmons LLP based on material originally written by Charles Goddard of Rosetta Tax LLP
UK REITs—anti-avoidance

The following Tax practice note produced in partnership with Martin Shah of Simmons & Simmons LLP based on material originally written by Charles Goddard of Rosetta Tax LLP provides comprehensive and up to date legal information covering:

  • UK REITs—anti-avoidance
  • Principal anti-avoidance rule
  • Development properties
  • Holder of excessive rights (or corporate ownership) test
  • Holder of excessive rights
  • Reasonable steps
  • Interest cover test
  • Early exit from the UK REIT regime

FORTHCOMING CHANGE: As part of review of the UK funds regime and in particular, a consultation on the tax treatment of asset holding companies, the government consulted until 23 February 2021 on changes to the real estate investment trust (REIT) regime including the:

  1. listing requirement

  2. institutional investors and close company requirement

  3. holders of excessive rights rule, and

  4. balance of business test

The government also consulted until 20 April 2021 on the UK funds regime more generally and sought views on REITs and

  1. the interest cover test and the corporate interest restriction

  2. the three-year development rule

  3. the three property rule, and

  4. the overseas property rules

See: Taxation of asset holding companies in alternative fund structures (second stage consultation), Review of the UK funds regime: a call for input and News Analysis: Promoting UK funds—potential reform of the UK REIT regime.

This Practice Note examines the principal anti-avoidance provisions which apply to companies and groups of companies within the UK REIT regime.

These rules amplify the anti-avoidance purpose of the conditions (and tests) for entry to, and ongoing application of, the UK REIT regime. These conditions and tests are considered in more detail in Practice Note: UK REITs—the conditions.

The purpose of the anti-avoidance rules is to prevent companies and groups from obtaining a tax advantage from the use of the UK REIT regime in circumstances where it was not intended

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