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HMRC internal manual

Guidance on Real Estate Investment Trusts

Group REITs: conditions for a group to join the regime

To become a Real Estate Investment Trust, a group of companies must come within the definition set out in section 134 FA 2006 - see GREIT11020. The group must then meet certain conditions before giving notice to be a Real Estate Investment Trust (see GREIT11015) and must meet those and other conditions (see GREIT12005) so long as it remains within the regime. Failure to meet these conditions may result in the group leaving the regime.

Other tests are applied to the group while it is in the regime (for example, the ‘interest cover’ test) but failing to pass these usually results in a tax charge, but not removal from the regime.

Conditions for joining the regime

In order to give notice to join the regime, the principal company (parent company) must meet three ‘Company’ conditions:

  • it must be UK resident and
  • it must not be an open-ended investment company.

These conditions are set out in section 106(2) to (4) FA 2006, as modified by paragraph 5(1) Schedule 17.

The conditions that the principal company of a Group REIT must meet to give notice for its group to join the regime are the same as those that a single company UK-REIT must meet to give notice. These are explained at GREIT02010.