Corporation Tax Act 2010 section 564

Breach of condition as to distribution of profits

Section 564 explains what happens when a UK REIT fails to distribute the required level of profits in an accounting period, and how the resulting tax charge is calculated.

• If a UK REIT fails to meet the profit distribution condition in section 530, the breach does not automatically end the REIT regime
• Instead, a specific amount (calculated under section 565) is charged to corporation tax as income, treated as profits of the REIT's residual business
• No losses, deficits, expenses or allowances can be set off against the section 565 amount
• In serious cases, HMRC retains the power under section 572 to issue a notice terminating the UK REIT regime altogether