Corporation Tax Act 2010 section 547

Funds awaiting reinvestment

Section 547 sets out how cash proceeds from the sale of assets used in a UK REIT's property rental business are treated for tax purposes while those proceeds are held in cash awaiting reinvestment.

• When a UK REIT or group member sells a property rental business asset and holds the proceeds in cash, any profits or losses from loan relationships connected with those proceeds are stripped out of the property rental business profits calculation and instead treated as part of the residual (non-property) business.
• "Held in cash" is broadly defined to include money on deposit in any currency, investments in gilts (UK government stocks and bonds listed in Part 1 of Schedule 11 to FA 1942), and any other form that HMRC may specify by regulations.
• Where an asset has been used partly for property rental business and partly for residual business over periods totalling at least one year, the section applies only to the portion of the sale proceeds that can reasonably be attributed to the property rental business, taking into account how much and for how long the asset served each purpose.
• The section also applies where section 535A ensures that the appropriate proportion of a gain or loss on disposal of interests in UK property-rich companies is excluded from being a chargeable gain or allowable loss — the cash proceeds from such disposals receive the same treatment.