Joint ventures: single company and grouped
Where a joint venture company or group meets the necessary conditions and a ‘look-through’ notice has been given in respect of that company or group, the joint venture is treated in much the same way as a 75%/ effective 51% subsidiary of the group (regulation 7 SI 2006/2866 and regulations 13 and 23 SI2007/3425). Note that does not mean that group reliefs or any other provisions that apply between members of a group are extended to the joint venture company.
The effect of the notice is that assets, profits etc of the joint venture are taken into account in testing if the UK-REIT meets the conditions of the regime. To the extent of the interest of the UK-REIT in the joint venture, the profits of its property rental business are exempt from CT. The joint venture c will also be required to pay an Entry Charge in respect of the UK-REIT’s share of the joint venture company’s assets that are involved in its property rental business.
Financial statement obligation
Where the joint venture involves a single company UK-REIT (i.e. a venturing company - see GREIT13015), the venturing company is obliged to prepare financial statements covering its activities and those of the joint venture company (regulation 5 SI 2006/2866). these are much the same as the financial statements that the principal company of a Group REIT is obliged to prepare for group activities. These financial statements should include the percentage of income, expenses, gains losses assets and liabilities of the joint venture company equal to the percentage of the beneficial interest held by the venturing company.
Similar rules apply to joint ventures carried out by a Group REIT as they do to those carried out by a single company UK-REITs, provided the joint venture is carried out through a limited company (regulations 13 and 12 SI 2006/2866) and, as above amounts are included equal to the amount of beneficial interest held by the venturing group.
Joint Venture Groups
For a joint venture group the principal company of that group is obliged to prepare financial statements in respect of the joint venture group and to include the amounts equal to the beneficial interest held in the member of the joint venture group by members of the joint venture group.