Corporation Tax Bill

House of Commons

Session 2009 - 10
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Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Part 12 — Real Estate Investment Trusts
Chapter 11 — Part 12: supplementary
308

Interpretation
604
Property rental business: exclusion of listed business
(1)
Business of a class listed in the table in subsection (2) is not property rental
business.
(2)
This is the table—
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Class
Description

Class 1
Incidental letting of property (whether in the United

Kingdom or elsewhere) which is held in connection with

a trade in property.

Class 2
Letting of property which is held for use for

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administrative purposes in carrying on property rental

business but is temporarily surplus to requirements for

those purposes, so long as—

(a)
the space let is small compared to the space

occupied for administrative purposes, and

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(b)
the letting is for a term of not more than 3 years.

Class 3
Letting of property if the property would fall in

accordance with generally accepted accounting practice

to be described as owner-occupied (but see subsection

(3)).

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Class 4
The provision of services in connection with property

outside the United Kingdom where the services would

not fall within Chapter 3 of Part 4 of CTA 2009 if

provided in connection with property in the United

Kingdom.

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Class 5
Entering into arrangements which are such that a

finance arrangement code (within the meaning given by

section 770(2) of this Act or section 809BZM(2) of ITA

2007) applies (factoring of income etc: finance

arrangements).

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(3)
For the purposes of class 3, ignore the fact that a property may fall to be
described as owner-occupied merely because of the provision by the company
of services to an occupant who—
(a)
is in exclusive occupation of the property, and
(b)
is not connected with a member of the group.
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(4)
The Commissioners for Her Majesty’s Revenue and Customs may by
regulations—
(a)
add a class to the table in subsection (2),
(b)
amend a class (or provision made in relation to it) or make such
provision in relation to a class as the Commissioners consider
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appropriate, or
(c)
remove a class from the table (or provision made in relation to it).

Corporation Tax Bill
Part 12 — Real Estate Investment Trusts
Chapter 11 — Part 12: supplementary
309

605
Property rental business: exclusion of business producing listed income
(1)
Business is not property rental business so far as it gives rise to income of a
class listed in the table in subsection (2).
(2)
This is the table—

Class
Description

5

Class 1
All income in connection with the operation of a caravan

site, if section 20(1) of ITTOIA 2005 (caravan sites) would

apply in respect of any receipts in connection with the

operation of the site.

Class 2
Rent in respect of an electric-line wayleave.

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Class 3
Rent in respect of the siting of a pipeline for gas.

Class 4
Rent in respect of the siting of a pipeline for oil.

Class 5
Rent in respect of the siting of a mast or similar structure

designed for use in a mobile telephone network or other

system of electronic communication.

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Class 6
Rent in respect of the siting of a wind turbine.

Class 7
Dividends from shares in—

(a)
the principal company of a group UK REIT, or

(b)
a company UK REIT.

Class 8
Income arising out of an interest in a limited liability

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partnership where section 1273(4) of CTA 2009 (winding

up) applies.

(3)
The Commissioners for Her Majesty’s Revenue and Customs may by
regulations—
(a)
add a class to the table in subsection (2),
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(b)
amend a class (or provision made in relation to it) or make such
provision in relation to a class as the Commissioners consider
appropriate, or
(c)
remove a class from the table (or provision made in relation to it).
606
Groups
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(1)
For the purposes of this Part a company (“the principal company”) and all its
75% subsidiaries form a group; and if any of those subsidiaries have 75%
subsidiaries the group includes them and their 75% subsidiaries, and so on.

This is subject to subsection (2).
(2)
A group does not include—
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(a)
a company (other than the principal company) which is not an effective
51% subsidiary of the principal company,
(b)
an insurance company,
(c)
an insurance subsidiary, or

Corporation Tax Bill
Part 12 — Real Estate Investment Trusts
Chapter 11 — Part 12: supplementary
310

(d)
an open-ended investment company.
(3)
A company cannot be a member of more than one group; and if a company
would be a member of more than one group, section 170(6) of TCGA 1992
(capital gains tax: groups) applies to determine the group of which it is a
member.
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(4)
Subsection (3) does not apply for the purposes of Chapter 10.
(5)
In this section—
“effective 51% subsidiary” has the meaning given by section 170(7) of
TCGA 1992 (groups of companies),
“75% subsidiary” has the meaning given by section 1154(3) (subsidiaries),
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“insurance company” has the meaning given by section 431(2) of ICTA,
“insurance subsidiary” means a company in which at least 75% of the
ordinary shares are held by one or more insurance companies, and
“open-ended investment company” has the meaning given by section 613.
607
Meaning of “entry” and “cessation” etc
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(1)
In this Part “entry” means—
(a)
in the case of a group, the time when the group becomes a group UK
REIT, and
(b)
in the case of a company, the time when the company becomes, or
becomes a member of, a UK REIT.
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(2)
In this Part “cessation” means—
(a)
in the case of a group, the time when the group ceases to be a UK REIT,
and
(b)
in the case of a company, the time when the company ceases to be, or to
be a member of, a UK REIT.
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(3)
In this Part, in relation to a group or company—
(a)
references to the “pre-entry group” or “pre-entry company” are
references to the group or company before entry, and
(b)
references to the “post-cessation group” or “post-cessation company”
are references to the group or company after cessation.
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608
References to assets
(1)
A reference in this Part to an asset includes a reference to—
(a)
part of an asset, and
(b)
an interest in, or right in relation to, an asset.
(2)
A reference in this Part to assets used in business of a company includes a
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reference to assets—
(a)
which were acquired for the purpose of that business and which are not
being used in another business,
(b)
which are available for use in that business, or
(c)
which are in any other way held in respect of, or associated or
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connected with, that business.
(3)
For the purposes of this Part an asset is “involved” in a business if it is property
involved in the business as described in section 529(4)(a).

Corporation Tax Bill
Part 13 — Other special types of company etc
Chapter 1 — Corporate beneficiaries under trusts
311

609
Definitions
In this Part—
“accounting period 1”, in relation to a company that is, or is a member of,
a UK REIT, means the accounting period that begins on entry (in
accordance with section 536(5)),
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“company” has the meaning given by section 170(9) of TCGA 1992, and
“market value” has the same meaning as in TCGA 1992 (see sections 272
and 273 of, and Schedule 11 to, that Act).
Part 13
Other special types of company etc
10
Chapter 1
Corporate beneficiaries under trusts
Discretionary payments
610
Discretionary payments by trustees to companies
(1)
This section applies if—
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(a)
the trustees of a settlement make a payment to a company,
(b)
sections 494 and 495 of ITA 2007 (grossing up of trustees’ discretionary
payments etc) apply in relation to the payment,
(c)
the company is chargeable to corporation tax, and
(d)
the company is not excluded by subsection (2).
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(2)
A company is excluded if it is—
(a)
a charitable company as defined in section 467,
(b)
an eligible body as defined in section 468, or
(c)
a scientific research association as defined in section 469.
(3)
If this section applies—
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(a)
none of the following applies in relation to the payment—
(i)
section 967,
(ii)
section 968, and
(iii)
section 952 of ITA 2007 (set-off claims),
(b)
the payment is to be ignored for the purpose of calculating the
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company’s income for corporation tax purposes, and
(c)
no repayment is to be made of the amount treated under section 494 of
ITA 2007 as income tax paid by the company in relation to the payment.
(4)
If the company is non-UK resident, this section applies only in relation to so
much (if any) of the payment as is income of the company for corporation tax
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purposes.
(5)
“Payment” includes payment in money’s worth.