Section 541 — Corporation Tax Act 2010: Ring-fencing of property rental business

Ring-fencing of property rental business 541 1 This section applies—

a in the case of a group UK REIT, to the group and to each company which is a member of the group, and b to a company UK REIT.

2 For corporation tax purposes property rental business of the group or company is treated as a separate business, distinct from—

a business of the pre-entry group or pre-entry company, b residual business of the group or company, and c business of the post-cessation group or post-cessation company.

3 For corporation tax purposes the group or company is treated as a separate group or company so far as it carries on property rental business, distinct from—

a the pre-entry group or pre-entry company, b the group or company so far as it carries on residual business, and c the post-cessation group or post-cessation company.

4 In particular—

a a loss made in property rental business may not be set off against profits of residual business, b a loss made in residual business may not be set off against profits of property rental business, c a loss made in business carried on before entry may not be set off against profits of property rental business, d a loss made in property rental business may not be set off against profits of business carried on after cessation (in respect of business of any kind),

and e receipts accruing after entry but relating to business carried on before entry are not treated as receipts of property rental business.

5 Nothing in this section prevents a loss made in business carried on before entry from being set off against profits of residual business.

6 In subsections (4) and (5) references to a loss include references to a deficit, expense, charge or allowance.

7 If a percentage of the profits of property rental business of a member of a group UK REIT is excluded from a financial statement in accordance with section 533(3), that percentage of those profits is to be treated for the purposes of this section as profits of the member's residual business.

8 This section has effect in relation to a non-UK member of a group, as if references to property rental business were references to UK property rental business.

9 For the meaning of “cessation”, see section 607(2).