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HMRC internal manual

Guidance on Real Estate Investment Trusts

Group REITs: definition of 'group' that can be a Real Estate Investment Trust


The exemptions from tax provided by Real Estate Investment Trust legislation can applyonly to members of a group of companies as defined in section 134 FA 2006. This definitionfollows closely the section 170 TCGA definition of ‘group of companies’. Itconsists of a parent company (referred to as the ‘principal company’ of a GroupREIT), its ‘75% subsidiaries’ and their 75% subsidiaries, provided they are all‘effective 51% subsidiaries’.

Residence of group members

Although the principal company is required to be UK resident, there is no restrictionon the state of residence of other members of the group, nor on the countries in whichthey carry on their activities.

Definitions of ‘75% subsidiary’ and ‘effective 51% subsidiary’

The definition of ‘75% subsidiary’ is as set out in section 838 ICTA(ownership, directly or indirectly, of 75% or more of the ordinary share capital).‘Effective 51% subsidiary’ has the same meaning as given by section 170 TCGA(the parent is beneficially entitled to 50% of distributable profits, and would beentitled to 50% of the assets on winding-up). For more detail on these definitions, seeCGM45101 onwards.

Definition of ‘company’

‘Company’ takes the same meaning as set out in section 170(9) TCGA, which isbroadly a company incorporated under UK or other law, a friendly society and a buildingsociety. Other bodies that are within the charge to corporation tax (such as a sports clubor authorised unit trust) do not come within this definition. Whether or not account istaken of their activities, assets and income for the various regime tests and conditionswill depend on the nature of the body – see GREIT09015 for more detail.

Membership of more than one group

Other than in certain limited circumstances, a company cannot be a member of more thanone Group REIT. The exception to this is where the company is the vehicle used to carry ona joint venture, and the principal company has made a ‘Joint VentureLook-Through’ election (see GREIT13015) in respect ofits interest in the company.