Corporation Tax Act 2010 section 573B

Notice under section 572: further condition relating to shares not met

Section 573B gives HMRC the power to issue a termination notice removing a company or group from the UK REIT regime where the share ownership condition has been repeatedly breached, relying too many times on the early-years relaxation.

• HMRC may issue a termination notice where a UK REIT (whether a single company or a group) would fail the share ownership condition in a given accounting period but for the early-years relaxation, and the company concerned has already relied on that relaxation in 3 or more other accounting periods.
• A company is treated as having benefited from the relaxation if, during an accounting period when the share ownership condition would otherwise have been breached, it was either a member of a group UK REIT or was itself a company UK REIT — but this does not include situations where the breach arose simply because the principal company of one group REIT joined another group REIT, or a company REIT became a member of a group REIT.
• If a company that benefited from the relaxation transfers its business (or part of it) to another company, the successor company — and any subsequent companies that take over that business — inherit the history of having benefited from the relaxation for the same accounting periods.
• Where HMRC issues a termination notice under this section, the company or group is treated as having left the UK REIT regime on the first day of its first accounting period as a REIT, or on a later date if HMRC specifies one in the notice.