UK REITs—breach of the conditions and exit
Produced in partnership with Martin Shah of Simmons & Simmons LLP based on material originally written by Charles Goddard of Rosetta Tax LLP
UK REITs—breach of the conditions and exit

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—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...

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.

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

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