Corporation Tax Act 2010 section 563

Breach of property rental business condition

Section 563 explains what happens when a UK REIT fails to meet the property rental business condition throughout an accounting period, and confirms that such a breach is simply ignored.

• The property rental business condition (as defined in section 561(3A)) must normally be met throughout each accounting period of a UK REIT.
• For a group UK REIT, the condition is assessed by reference to the principal company of the group; for a company UK REIT, it is assessed by reference to the company itself.
• If the condition is not met throughout an accounting period, the breach is simply disregarded — it does not, by itself, cause the UK REIT regime to end.
• However, this protection is subject to section 572, which gives HMRC the power to issue a notice terminating a company's UK REIT status in certain circumstances.