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HMRC internal manual

Guidance on Real Estate Investment Trusts

HM Revenue & Customs
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Leaving the regime: exit by HMRC notice



HMRC can issue a notice to a UK-REIT (to the company/principal company) that the regime will cease to apply to it (section 572 CTA 2010). The circumstances in which this can be done are:


  • the UK-REIT has been given two notices under the provisions of section 545 CTA 2010 (cancellation of a tax advantage), or
  • the UK-REIT has relied on the minor breach provisions in Chapter 10 CTA 2010 on a specified number of occasions, or
  • HMRC have reason to believe that a breach of a regime condition under section 529 CTA 2010 (conditions as to the property rental business) (section 107 (Tax-exempt business Conditions)) or section 531 CTA 2010 (conditions as to the balance of business) or an attempt by the UK-REIT to obtain a tax advantage is sufficiently serious that the regime should cease to apply to the company / group without the minor breach provisions being applicable in the first instance.

The number of times the minor breach provisions can be relied on is ‘specified’ in section 577 CTA 2010. Note that the specified numbers apply to different minor breaches, and some minor breaches do not count for this purpose. The rules for each condition are described in GREIT07005 onwards.

Contents of notice

A notice issued under section 572 CTA 2010 must specify the reason for its issue. The date from which the regime is to cease to apply to the company/ group will be from the end of the accounting period before the one in which the event that triggered the issue of the notice occurred.

For example, section 576(2) CTA 2010 allows a UK-REIT to rely on the minor breach provisions for the Balance of Business income test twice in a ten year period. A company that joined the regime on 1 January 2007 breaches the income test a third time for accounting period ending 31 December 2015. The notice will specify that the regime ceases to apply to the company on 31 December 2014, since the event that triggers the notice (third breach of the income test) occurs in the accounting period ending 31 December 2015.

The exception is if the trigger event is within ten years of joining the regime in which case HMRC can direct, inter alia, that a different date of cessation applies - see GREIT06035.

Right of appeal

When a company/ principal company receives a notice from HMRC under section 572 CTA 2010, they can appeal against it. The appeal must be made in writing to HMRC within 30 days from the date on which the notice is issued.

Any appeals against a section 572 CTA 2010 notice are to be dealt with by the First-tier Tribunal.