IFM29200 - Real Estate Investment Trust :Miscellaneous: transfers within a group: TCGA1992/S171

Disposals by a company that is a UK-REIT are included in the list of disposals in TCGA1992/S171(2) to which S171(1) (transfer within a group: general provisions) does not apply.  Note that where the parent company of a group elects to join the regime as a group, it is the group as a whole that is a UK-REIT – neither the principal company nor the subsidiary companies are individually a UK-REIT.  This means that TCGA1992/S171(2)(da) applies only where the parent of a group has joined the regime as a company UK-REIT.     

Company UK-REIT with subsidiaries

Transfers of assets within a group under the provisions of TCGA1992/S171 TCGA cannot be made where the transfer is between a company that has joined the regime as a company UK-REIT (even though it is the parent of a group of companies) and another member of its group.  This is because a disposal by a company that is a Real Estate Investment Trust is in the list of disposals in TCGA192/S171(2) to which section 171(1) (transfer within a group: general provisions) do not apply. 

Where a company with 75% subsidiaries joins the regime as a company UK-REIT, the principal company is covered by the UK-REIT rules in CTA2010/Part 12 but its subsidiaries are not.  In this case, the parent company cannot transfer assets at no gain/ no loss to its subsidiaries.  Neither can the subsidiaries transfer assets to the parent company at no gain/ no loss, but one subsidiary can use S171(1) to transfer an asset to another subsidiary at no gain/ no loss.  

Group REITs

The operation of TCGA1992/S171 for a Group REIT is covered by CTA2010/S601, and an example of how it works can be found IFM25050. 

TCGA 1992/S171(2)(da) (which deals with the application of TCGA1992/S171 in the context of a company UK-REIT) does not apply where the parent company of a group has given notice to join the regime as the principal company of a group UK-REIT.