Corporation Tax Act 2010 section 537

Effects of entry: CAA 2001

Section 537 modifies how capital allowances under the Capital Allowances Act 2001 operate when a company (including a joint venture company) enters the UK REIT regime, supplementing the deemed sale and reacquisition rules in section 536.

• The deemed sale and reacquisition of assets on entry to the UK REIT regime does not give rise to any capital allowances or balancing charges under the Capital Allowances Act 2001.
• The deemed sale and reacquisition does not allow the company to make an election to apportion the sale price or capital sum in respect of fixtures (under sections 198 or 199 of CAA 2001).
• The market value deemed consideration rule in section 536(3) does not apply for capital allowances purposes, meaning the normal capital allowances history of the asset continues uninterrupted.
• After entry into the regime, anything previously done by or to the company in relation to a deemed sold and reacquired asset is treated as having been done by or to the company in its capacity as a property rental business.

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