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HMRC internal manual

Guidance on Real Estate Investment Trusts

Breaches of conditions: multiple breaches: example


This example looks at how multiple breach rules for one or more conditions interact.For detail on the multiple breach rules, see GREIT07065.


Company C is a UK-REIT, with an accounting date of 31 December. It has the followinghistory of breaching conditions after joining the regime on 1 January 2007.

  1. C breaches the Balance of business income test for accounting periods ending 31 December 2008 and 2011 (two separate breaches).
  2. C breaches the Balance of business asset test at the start of accounting periods ending 31 December 2010 and 2016 (two separate breaches).
  3. It fails property condition 1 for accounting period ending 31 December 2017.

Breaches (1) and (2) are both in section 108 (Balance of business income and assetstests), so regulation 7B applies. In the ten year period beginning on 1 January 2008,C has breached each of the two conditions twice, so can remain in the regime provided Cdoes not breach either condition again before 1 January 2018.

Breach (3) is in section 107 (property condition 1) which is in a different section fromthe previous breaches (all four were in section 108). The multiple breach rules will applyif the failures are within a ten year period. This begins with the first breach (1), on 1January 2008 and runs to 31 December 2017.

C has therefore breached regime conditions on five occasions in ten years. HMRC will issuea termination notice under section 129(2)(a) FA 2006, specifying multiple breaches ofseparate conditions as the reason. Termination will be with effect from 31 December2016,being the end of the accounting period before the last event that triggered the notice.