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Real Estate Investment Trusts: excluded business and income |
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1 (1) | Incidental letting of property (whether in the United Kingdom or outside) |
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which is held in connection with a property development trade. |
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(2) | In sub-paragraph (1) “property development” means the development of |
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land with the sole or main object of realising a gain from the disposal of an |
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2 | Letting of property which is held for use for administrative purposes in |
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carrying on property rental business but is temporarily surplus to |
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requirements for those purposes, provided that— |
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(a) | the space let is comparatively small compared to the space occupied |
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for administrative purposes, and |
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(b) | the letting is for a term of not more than three years. |
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3 | The provision of services in connection with property outside the United |
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Kingdom where the services would not fall within Schedule A if provided |
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in connection with property in the United Kingdom. |
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4 | Entering into finance agreements to which sections 43A to 43G of ICTA |
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Classes of income or profit |
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5 | All income in connection with the operation of a caravan site, if section 20(1) |
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of ITTOIA 2005 (caravan sites) would apply in respect of any receipts in |
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connection with the operation of the site. |
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6 | Rent in respect of an electric-line wayleave. |
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7 | Rent in respect of the siting of a pipeline for gas. |
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8 | Rent in respect of the siting of a pipeline for oil. |
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9 | Rent in respect of the siting of a mast or similar structure designed for use in |
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a mobile telephone network or other system of electronic communication. |
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10 | Rent in respect of the siting of a wind turbine. |
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11 | Dividends from shares in a company to which this Part of this Act applies. |
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12 | Income arising out of an interest in a limited liability partnership where |
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section 118ZA(4) of ICTA (winding-up) applies. |
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13 | The Commissioners for Her Majesty’s Revenue and Customs may by |
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(a) | add a paragraph to Part 1 or 2 of this Schedule, |
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(b) | amend a paragraph of Part 1 or 2 of this Schedule, or |
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(c) | repeal a paragraph of Part 1 or 2 of this Schedule. |
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Group Real Estate Investment Trusts: modifications |
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1 | This Schedule sets out the modifications of Part 4 in its application to groups. |
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2 | In this Schedule, in relation to a group— |
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(a) | “G (pre-entry)” means the group before Part 4 begins to apply to it, |
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(b) | “G (property rental business)” means the group in so far as it carries |
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on property rental business which satisfies Conditions 1 to 3 of |
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section 107 (as modified by paragraph 6 below) while Part 4 applies |
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(c) | “G (residual)” means the group in so far as it carries on other |
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business while Part 4 applies to it, and |
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(d) | “G (post-cessation)” means the group after Part 4 has ceased to apply |
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3 (1) | A reference in this Schedule to a UK resident company is a reference to a |
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(a) | is resident in the United Kingdom, and |
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(b) | is not resident in another place in accordance with the law of that |
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place relating to taxation. |
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(2) | A reference in this Schedule to UK profits of a group is a reference to— |
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(a) | amounts shown in the financial statements of G (property rental |
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business) as profits of UK resident members of the group, and |
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(b) | amounts shown in the financial statements of G (property rental |
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business) as profits of business in the United Kingdom of other |
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(3) | A reference to UK business of a group is a reference to— |
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(a) | the business of UK resident members of the group, and |
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(b) | business in the United Kingdom of other members. |
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4 | Except where the context otherwise requires and subject to the provisions of |
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this Schedule, a reference to a company shall be treated as a reference to a |
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5 (1) | In section 106 a reference to a company shall be treated as a reference to the |
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(2) | The requirement in section 106(2) shall be treated as including a requirement |
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that the principal company prepare for the accounting period, and submit to |
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the Commissioners for Her Majesty’s Revenue and Customs, financial |
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statements in accordance with paragraph 31 (“the financial statements”). |
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6 (1) | For the purposes of section 107(1) the property rental businesses of the |
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members of the group shall be treated as a single business. |
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(2) | For section 107(7)(a) substitute— |
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“(a) | the members of the group shall be treated as a single |
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(aa) | if the shares of a member of the group are stapled to the |
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shares of another company, the stapled company and the |
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members of the group shall be treated as a single company,”. |
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(3) | For section 107(8) substitute— |
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“(8) | Condition 4 is that at least 90% of the UK profits of the property |
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rental business arising in the accounting period are distributed— |
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(a) | by the principal company, |
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(b) | by way of dividend, and |
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(c) | on or before the filing date for the principal company’s tax |
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return for the accounting period (see paragraph 14 of |
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| and for the purposes of this Condition “UK profits” means amounts |
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shown in the financial statements of G (property rental business) as |
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profits of UK resident members of the group.” |
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(4) | In the application of section 107(9) compliance with Condition 4 shall be |
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treated as unlawful in so far as— |
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(a) | the Condition applies to the profits of the property rental business |
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attributable to a member, and |
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(b) | compliance with the Condition by the member would (if the |
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Condition applied to it) be unlawful as described in section |
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7 | In the application of section 108— |
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(a) | the aggregate amount shown in the financial statement as profits of |
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members of G (property rental business), calculated in accordance |
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with international accounting standards, shall be treated as the |
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amount of the income accruing from tax-exempt business, |
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(b) | the aggregate amount shown in the financial statements as the |
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amount of the profits of members of G (residual) shall be treated as |
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the amount of the income accruing from non-tax-exempt business, |
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(c) | the amount shown in the financial statements as the amount of the |
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assets of G (property rental business) shall be treated as the amount |
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of the assets involved in tax-exempt business, and |
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(d) | the amount shown in the financial statements as the amount of the |
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assets of G (residual) shall be treated as the amount of the assets |
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involved in non-tax-exempt business. |
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|
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|
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Entering Real Estate Investment Trust Regime |
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8 (1) | A notice under section 109 must be given by the principal company. |
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(2) | For the purposes of the requirement under section 109(2)(c) a reference to the |
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company shall be treated as a reference to the principal company. |
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9 (1) | In section 111(1) a reference to C (pre-entry) shall be treated as a reference to |
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a UK resident member of G (pre-entry). |
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(2) | Section 111(2) shall have effect in relation to each UK resident company |
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which is a member of the group; and for that purpose— |
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(a) | a reference to C (pre-entry) (in subsection (2) or (4)) shall be treated |
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as a reference to the company as a member of G (pre-entry), and |
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(b) | a reference to C (tax-exempt) (in subsection (2) or (4)) shall be treated |
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as a reference to the company as a member of G (property rental |
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(3) | In section 111(5) the reference to the company shall be treated as a reference |
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to each UK resident member. |
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(4) | Where a percentage of the assets of a member of G (property rental business) |
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is excluded from a financial statement in accordance with paragraph 31(5), |
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the excluded percentage shall be disregarded for the purposes of section 111. |
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10 (1) | If a UK resident company becomes a member of a group to which Part 4 |
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applies, section 111 shall apply to the company as if— |
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(a) | references to entry were references to becoming a member of the |
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(b) | references to C (pre-entry) were references to the company before |
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becoming a member of the group, and |
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(c) | references to C (tax-exempt) were references to the company as a |
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member of G (property rental business). |
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(2) | Where a percentage of the assets of the company would be excluded from a |
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financial statement in accordance with paragraph 31(5), the percentage |
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which would be excluded shall be disregarded in applying section 111 to the |
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11 (1) | In the application of section 112— |
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(a) | a reference to a company to which Part 4 applies shall be treated as a |
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reference to each member of a group to which Part 4 applies, |
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(b) | a reference to C (residual) shall be treated as a reference to the |
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company as a member of G (residual), |
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(c) | in subsection (3) the reference to assets treated as sold and re- |
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acquired under section 111(2) shall be construed in accordance with |
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paragraph 9(4) or 10(2), and |
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(d) | the section shall apply to non-UK resident members— |
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(i) | as if section 111 applied to UK property rental business |
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(within the meaning given by paragraph 32(1)) carried on by |
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(ii) | as if a reference to a charge to corporation tax under Case VI |
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of Schedule D were a reference to a charge to income tax, and |
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(iii) | as if a reference to the rate at which the company pays tax on |
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income were, where relevant, a reference to the rate at which |
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|
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|
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|
the company would pay tax on the notional income if it were |
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the highest part of the company’s income. |
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(2) | Where a company joins a group to which Part 4 applies, section 112 shall |
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apply to the company as if joining the group amounted to becoming a |
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company to which Part 4 applies (but with a reference to C (residual) being |
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treated as a reference to the company as a member of G (residual)). |
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12 (1) | Section 113(1) to (4) shall apply in relation to G (property rental business), G |
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(pre-entry), G (residual) and G (post-cessation) as they apply in relation to C |
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(tax-exempt), C (pre-entry), C (residual) and C (post-cessation). |
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(2) | Section 113(1) to (6) shall also apply in relation to each UK resident company |
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which is a member of the group; for which purpose— |
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(a) | a reference to C (tax-exempt) is a reference to the company if or in so |
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far as it is a member of G (property rental business), |
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(b) | a reference to C (pre-entry) is a reference to the company as a |
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member of G (pre-entry) (or, in the case of a company which joins a |
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group to which Part 4 applies, a reference to the company before |
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(c) | a reference to C (residual) is a reference to the company if or in so far |
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as it is a member of G (residual), and |
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(d) | a reference to C (post-cessation) is a reference to the company as a |
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member of G (post-cessation) (or, in the case of a company which |
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leaves a group to which Part 4 applies, a reference to the company |
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(3) | Where a percentage of the profits of a member of G (property rental |
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business) is excluded from a financial statement in accordance with |
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paragraph 31(5), the excluded percentage shall be treated for the purposes |
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of section 113 as profits of G (residual). |
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13 | Regulations under section 114 may make provision in relation to a group to |
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which Part 4 applies as if references to the company were references to the |
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14 | Section 115 shall apply as if for subsection (2) there were substituted— |
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“(2) | That sum is—![equation: over[plus[(*n*)times[char[P],char[r],char[o],char[f],char[i],char[t],char[s]],times[
char[F],char[i],char[n],char[a],char[n],char[c],char[i],char[n],char[g],char[C],
char[o],char[s],char[t],char[s],id[times[char[a],char[l],char[l]]]]],times[char[
F],char[i],char[n],char[a],char[n],char[c],char[i],char[n],char[g],char[C],char[
o],char[s],char[t],char[s],id[times[char[e],char[x],char[t],char[e],char[r],char[
n],char[a],char[l]]]]]](missing.gif) |
| |
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(a) | Profits means the aggregate of the UK profits of G (property |
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rental business) arising in the accounting period as set out in |
| 35 |
the financial statement under paragraph 31(2)(b) (before the |
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offset of capital allowances), |
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(b) | Financing Costs (all) means the amount of the financing costs |
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incurred in respect of the property rental business of G |
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(property rental business) as set out in the financial statement |
| 40 |
under paragraph 31(2)(b), and |
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(c) | Financing Costs (external) means the amount of the financing |
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costs incurred in respect of the UK business of G (property |
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|
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|
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|
rental business), excluding financing costs owed by one |
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member of G (property rental business) to another, as set out |
| |
in the financial statement under paragraph 31(2)(a).” |
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15 (1) | In section 117(1) the reference to the company shall be treated as a reference |
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to a member of the group. |
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(2) | An appeal under section 117(6) may be made by the member of the group on |
| |
which the assessment is made. |
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16 | Section 118 shall apply as if— |
| |
(a) | a reference to C (residual) were a reference to G (residual), and |
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(b) | a reference to C (tax-exempt) were a reference to G (property rental |
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17 (1) | Section 119 shall apply only in relation to each UK resident company which |
| |
is a member of the group; for which purpose— |
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(a) | a reference to C (tax-exempt) is a reference to the company if or in so |
| |
far as it is a member of G (property rental business), and |
| |
(b) | a reference to C (residual) is a reference to the company if or in so far |
| |
as it is a member of G (residual). |
| |
(2) | Where a percentage of the profits of a member of G (property rental |
| 20 |
business) is excluded from a financial statement in accordance with |
| |
paragraph 31(5), the excluded percentage shall be treated for the purposes |
| |
of corporation tax as profits of the member in so far as it is a member of G |
| |
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18 (1) | In the application of section 121(1)— |
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(a) | the reference to a company to which Part 4 applies shall be treated as |
| |
a reference to the principal company of a group to which Part 4 |
| |
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(b) | the reference to the profits of C (tax-exempt) shall be treated as a |
| |
reference to amounts shown in the financial statements of G |
| 30 |
(property rental business) as— |
| |
(i) | the profits of the UK resident members of the group, and |
| |
(ii) | gains accruing to UK resident members of the group. |
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(2) | In section 121(5) the reference to a company to which Part 4 applies shall be |
| |
treated as a reference to the principal company of a group to which Part 4 |
| 35 |
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(3) | In the application of section 121(8)— |
| |
(a) | for paragraph (a) substitute— |
| |
“(a) | the reference to the principal company of a group to |
| |
which this Part applies includes a reference to the |
| 40 |
principal company of G (post-cessation),” and |
| |
(b) | disregard paragraph (b). |
| |
19 (1) | In the application of section 122(1)(a)— |
| |
|
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|
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|
(a) | the reference to a company to which Part 4 applies shall be treated as |
| |
a reference to the principal company of a group to which Part 4 |
| |
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(b) | the reference to profits of a company’s tax-exempt business shall be |
| |
treated as a reference to amounts shown in the financial statements |
| 5 |
of G (property rental business) as— |
| |
(i) | the profits of the UK resident members of the group, and |
| |
(ii) | gains accruing to UK resident members of the group. |
| |
(2) | In the application of section 122(2)(n), (o) and (p) a reference to a company |
| |
shall be treated as a reference to the principal company. |
| 10 |
(3) | In the application of section 122 disregard subsection (5). |
| |
20 | In the application of section 123— |
| |
(a) | the reference to a company to which Part 4 applies shall be treated as |
| |
a reference to the principal company of a group to which Part 4 |
| |
| 15 |
(b) | the reference to C (tax-exempt) shall be treated as a reference to a |
| |
member of G (property rental business). |
| |
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21 (1) | Sections 124 to 126 shall apply only in relation to each UK resident company |
| |
which is a member of the group; for which purpose— |
| 20 |
(a) | a reference to C (tax-exempt) is a reference to the company if or in so |
| |
far as it is a member of G (property rental business), and |
| |
(b) | a reference to C (residual) is a reference to the company if or in so far |
| |
as it is a member of G (residual). |
| |
(2) | Where a percentage of the gains of a member of G (property rental business) |
| 25 |
is excluded from a financial statement in accordance with paragraph 31(5), |
| |
the excluded percentage shall be treated for the purposes of corporation tax |
| |
as gains of the member in so far as it is a member of G (residual). |
| |
22 | In the application of section 125(7) a reference to the company shall be |
| |
treated as a reference to a member of the group. |
| 30 |
Leaving Real Estate Investment Trust Regime |
| |
23 | In sections 128 to 130 a reference to the giving of a notice by or to a company |
| |
shall be treated as a reference to the giving of a notice by or to the principal |
| |
| |
24 | An appeal under section 129(6) may be made by the principal company. |
| 35 |
25 (1) | Section 131 shall apply in relation to each UK resident company which is a |
| |
member of the group; for which purpose— |
| |
(a) | a reference to C (tax-exempt) is a reference to the company if or in so |
| |
far as it is a member of G (property rental business), |
| |
(b) | a reference to C (residual) is a reference to the company if or in so far |
| 40 |
as it is a member of G (residual), and |
| |
(c) | a reference to C (post-cessation) is a reference to the company as a |
| |
member of G (post-cessation). |
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