Corporation Tax Act 2010 section 582

Early exit

Section 582 deals with the consequences when a group or company loses its UK REIT status within ten years of joining the regime, due to termination by HMRC or automatic termination for breach of conditions, and sets out the powers HMRC has to make directions affecting the tax treatment of that group or company.

• If a group or company ceases to be a UK REIT within ten years of entry, as a result of HMRC termination or automatic termination for breach of conditions, HMRC may issue directions modifying how the REIT rules or wider corporation tax rules apply to that group or company.
• HMRC directions can change the effective date of cessation, override or alter the normal tax exemptions for property rental profits and gains, and restrict the use of losses, deficits or expenses — preventing all or part of them from being set off or otherwise used.
• Where the UK REIT is a group, any direction can apply to the group as a whole or to one or more individual members of the group.
• The principal company of a group, or the company itself, may appeal against a direction to the tribunal, which has the power to quash, affirm or vary the direction.