Corporation Tax Act 2010 section 562C

Breach of further condition relating to shares in accounting periods 1, 2 and 3

Section 562C sets out the consequences when a UK REIT fails to meet the share ownership condition (as relaxed for new REITs) across its first three accounting periods, and the circumstances in which such a breach may be disregarded.

• If the relaxed share ownership condition is not met in any of the first three accounting periods, the group or company is treated as having ceased to be a UK REIT at the end of the second accounting period.
• The loss of REIT status is backdated to the end of accounting period 2, not accounting period 3, even though the breach spans all three periods.
• An exception applies where the breach arises because the principal company of a group REIT joins another group REIT, or a single-company REIT becomes a member of a group REIT — in these cases the breach is ignored entirely.
• The terms "accounting period 2" and "accounting period 3" carry the same meanings as defined in the relaxation provisions of section 528B.