Corporation Tax Act 2010 section 561

Notice of breach of relevant Chapter 2 condition

Section 561 requires the principal company of a group UK REIT, or a standalone company UK REIT, to notify HMRC as soon as reasonably practicable if any of the specified Chapter 2 conditions for maintaining UK REIT status ceases to be met.

• A UK REIT must notify HMRC promptly whenever a relevant Chapter 2 condition — covering company conditions, share conditions, property rental business requirements, profit distribution rules, and balance of business tests — ceases to be met
• The notification must include the date the condition was breached, the date it was met again (if applicable), a description of the breach, and details of any steps taken to prevent recurrence
• A special grace period applies to Condition D (the requirement to have shares admitted to trading on a recognised stock exchange): no notification is required if Condition D is breached during the first three years of UK REIT status
• If Condition D is still not met at the start of the day immediately after the end of the initial three-year period, the company is treated as having breached Condition D on that day and the normal notification obligation then applies