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HMRC internal manual

Guidance on Real Estate Investment Trusts

Group REITs: general definitions relating to group members and their activities

UK resident company

For members of the Group REIT, Schedule 17 FA 2006 applies the same definition of ‘UK resident company’ as is used as Company Condition 1 in section 106 FA 2006. It is a company that is resident in the UK and not resident elsewhere for tax purposes.

A company may be resident in the UK for UK tax purposes and resident in another state for its tax purposes. It will be a ‘UK resident company’ for the purposes of Schedule 17 FA 2006 only if there is a double tax treaty between the UK and the other state that contains a tie-break clause for dual residence, which gives priority to UK residence in the circumstances of the particular company. See GREIT02010 for more on company residence.

Guidance on the residence of companies can be found in the international manual at INTM120000

Definitions relating to activities of the group (paragraph 3 Schedule 17 FA 2006)

UK profits of a group

These are the profits of members of the group that are exempt from UK tax as a result of the application of rules of the UK-REIT regime. It is made up of two amounts.

The first is the amount of profits shown in the financial statements of G (property rental business) that relate to UK resident members of the group. This can include rental and gains arising from UK properties and overseas properties.

The second is the amount of profits shown in the financial statements of G (property rental business) that relate to rental and gains arising to non-resident group members from UK properties only.

The term G (tax-exempt) is used in the guidance as shorthand to describe the part of the group that generates these ‘UK profits’ (see GREIT11040).

UK business of a group

This refers to the business of members of the group over which the UK has taxing rights. It covers all the business of UK resident members of the group, and the UK business of non-resident group members.