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HMRC internal manual

Guidance on Real Estate Investment Trusts

Breaches of conditions: Company Conditions 3 and 4 (listing condition and 'not close'): other breaches


Breach of Company Conditions 3 and 4 (shares listed on a recognised stock exchange and‘not close’) result in automatic termination, apart from take-over by anotherUK-REIT and where the breach was a result of the action of others (see GREIT07015 and GREIT07020. Wherethese particular circumstances do not apply, the regime will generally cease to apply tothe company with effect from the end of the accounting period before the one in which thebreach occurred (regulation 4(2) SI 2006/2864).

Note that as with all the conditions, if HMRC thinks that a breach of Company Conditions 3or 4 is an attempt by the company to obtain a tax advantage, they may give notice to thecompany to remove the company or the group from the UK-REIT regime. This is regardless ofwhether the limits for breaching any of the individual conditions, or the multiple breachlimits have been reached.

The consequences of the issue of a termination notice by HMRC are dealt with at GREIT06025, and the date of termination may be different fromthe date that would apply in normal circumstances.