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HMRC internal manual

Guidance on Real Estate Investment Trusts

Group conditions and rules: Financial Statements: G (property rental business) and G (residual): treatment of entities that are not wholly owned

Subsidiary companies that are not wholly owned (paragraph 31(5) and (6) Schedule 17 FA2006)

Where the group’s interest in a subsidiary company is less than 100%, the financialstatements exclude a proportion of the income, expenses and values represented by thebeneficial interest in the company held by non-members of the group. For this purpose, thebeneficial interest in the subsidiary is measured by reference to the beneficialentitlement to profits available for distribution to shareholders.

Joint venture companies

A group may be involved in a joint venture carried on via a company. If there is aJoint Venture Look-Through notice in place (see GREIT13020),then the group (referred to as the venturing group) includes the income, assets etc of thejoint venture company in the financial statements for G (property rental business) and G(residual) in the same way as it does for the same items for companies that are members ofthe venturing group (regulation 12 SI 2006/2866).

Other entities in which the group has an interest

A group may contain within it a number of other entities, such as partnerships, unittrusts, joint ventures and companies that are not 75% owned. The activities of theseentities are reflected in the financial statements for G (property rental business) and G(residual) in one of two ways, depending on the nature of the vehicle and the level ofinfluence members of the group have over it. One way broadly treats the entity as opaque(see GREIT12130); the other treats the wrapper as transparentand takes account of the activities carried on by the entity (see GREIT12135).