Section 536 — Corporation Tax Act 2010: Effects of entry: corporation tax

Effects of entry: corporation tax 536 1 Property rental business carried on before entry by a company which becomes, or becomes a member of, a UK REIT (an “incoming company”) is to be treated for corporation tax purposes as ceasing at entry.

2 Assets which immediately before entry are involved in property rental business of an incoming company are to be treated for corporation tax purposes as being—

a sold by the pre-entry company immediately before entry, and b reacquired immediately after entry by the company so far as it carries on property rental business.

3 The sale and reacquisition deemed under subsection (2) is to be treated as being for a consideration equal to the market value of the assets.

4 A gain accruing as a result of subsection (2) is not a chargeable gain.

5 For corporation tax purposes, one accounting period of an incoming company ends on entry and a new one begins.

6 In the case of a group UK REIT—

a if a percentage of the assets of a member of the group is excluded from a financial statement in accordance with section 533(3), that percentage of those assets is to be ignored in the application of subsection (2) to the member, and b this section has effect in relation to a non-UK member of the group as if references to property rental business were references to UK property rental business of the member.

7 This section does not apply if—

a a company which was a member of one group UK REIT becomes a member of a different group UK REIT, or b a company which was a company UK REIT becomes a member of a group UK REIT.

8 This section and section 537 are subject to section 559 (demergers: company leaving group UK REIT).

9 For the meaning of “entry”, see section 607(1).