UK REITs—breach of the conditions and exit
UK REITs—breach of the conditions and exit

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • UK REITs—breach of the conditions and exit
  • A breach (or breaches) of conditions or tests
  • Automatic termination
  • Notification
  • Breach of the listing or trading conditions
  • Breach of the close company condition
  • Breach of property rental business (PRB) conditions
  • Breach of distribution condition
  • Breach of balance of business conditions
  • Multiple breaches
  • more

Produced in partnership with Martin Shah of Simmons & Simmons LLP; material originally written by Charles Goddard of Rosetta Tax LLP

In order to be within the regime for Real Estate Investment Trusts (REITs) in the UK, a company or group of companies must meet a number of conditions and tests in each accounting period.

These conditions and tests cover:

  1. a series of basic conditions relating to the status and conduct of the UK REIT (or in the case of a UK group REIT the group’s principal company), and

  2. some more detailed conditions and tests relating to the balance of business of the UK REIT or the UK group REIT and a number of other matters

Detailed analysis of these conditions can be found in Practice Note: UK REITs—the conditions.

This Practice Note considers the consequences of a breach (or series of breaches) of the conditions and tests. Depending on the nature, severity and, in some cases, regularity of the breaches in question, the consequences can range from a financial penalty to the automatic exit from the regime.

The Practice Notes also covers:

  1. the consequence of exit from the regime, and

  2. the methods by which exit can be achieved, including exit by notice

A summary of the UK’s REIT regime is set out in Practice Note: Real estate investment trusts—summary.

Other aspects of the UK REIT regime are