Section 551 — Corporation Tax Act 2010: Tax consequences of distribution to holder of excessive rights

Tax consequences of distribution to holder of excessive rights 551 1 Subsection (3) applies if—

a a distribution is made to or in respect of a holder of excessive rights that is not an excluded holder (both as defined by section 553),

and b the distributor has not taken reasonable steps to prevent a distribution to or in respect of such a person from being made. 2 “ The distributor ” means—

a in the case of a group UK REIT, the principal company of the group, and b in the case of a company UK REIT, the company.

3 The distributor is treated as receiving an amount of income calculated in accordance with section 552 (“the section 552 amount”).

4 The section 552 amount is chargeable to corporation tax under the charge to corporation tax on income.

5 It is treated—

a as arising in the accounting period in which the distribution was made, and b as profits of residual business of the distributor.

6 Accordingly, it is charged to corporation tax at the main rate of corporation tax. 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 No loss, deficit, expense or allowance may be set off against the section 552 amount.