Corporation Tax Act 2010 section 559

Demergers: company leaving group UK REIT

Section 559 allows a company leaving a group UK REIT as part of a demerger to remain within the UK REIT regime, provided certain conditions are met and appropriate notice is given.

• A company leaving a group UK REIT can continue in the REIT regime if it immediately joins or forms a new group (or stands alone) that satisfies the UK REIT qualifying conditions for company status, property rental business, profit distribution, and balance of business.
• The principal company of the new group, or the exiting company itself, must give notice to become a UK REIT no later than the date the company leaves the original group, with the effective date on the notice matching the departure date.
• If the conditions are met, the exiting company is treated as remaining within the UK REIT regime for a six-month transitional period, during which the normal entry and exit tax consequences do not apply.
• If, at the end of the six-month period, certain conditions regarding the company's shares being listed, not being close, and not being an open-ended investment company are still not met, the relief is withdrawn and the company is treated as having left the REIT regime on the original departure date.