Corporation Tax Act 2010 section 562A

Breach of condition D in section 528 (conditions for company)

Section 562A sets out the consequences of breaching condition D (one of the conditions a company must meet to qualify as a UK REIT), including when a breach can be ignored and when it results in the company or group losing UK REIT status.

• Breaches of condition D during the first three years of UK REIT status are automatically disregarded
• After the initial three-year period, a breach generally results in the company or group being treated as having ceased to be a UK REIT, backdated to the end of the accounting period before the breach began (or the end of the three-year period, if later)
• A breach is ignored if it arises because the principal company joins another group UK REIT or a company UK REIT becomes a member of a group UK REIT
• A breach caused by the actions of a third party is ignored provided the company remedies it by the end of the accounting period following the one in which the breach began; otherwise, REIT status is lost from the end of the accounting period in which the breach started