Part 4Real Estate Investment Trusts

Leaving Real Estate Investment Trust Regime

C1C2131Effects of cessation

1

The business of C (tax-exempt) shall be treated for the purposes of corporation tax as ceasing immediately before cessation.

2

Assets which immediately before cessation are involved in the business of C (tax-exempt) shall be treated for the purposes of corporation tax as being sold by C (tax-exempt) immediately before cessation and re-acquired immediately after cessation by C (post-cessation).

3

The sale and re-acquisition deemed under subsection (2) shall be treated as being for a consideration equal to the market value of the asset.

4

For the purposes of CAA 2001—

a

the sale and re-acquisition deemed under subsection (2)—

i

shall not give rise to allowances or charges, and

ii

shall not make it possible to make an election under section 198 or 199 of that Act (apportionment),

b

subsection (3) above shall not apply, and

c

anything done by or to C (tax-exempt) before cessation in relation to an asset which is deemed to be sold and re-acquired shall be treated after cessation as having been done by or to C (post-cessation).

5

For the purposes of corporation tax, on cessation an accounting period of C (residual) shall end and an accounting period of C (post-cessation) shall begin.

6

For the purposes of subsection (2) an asset is involved in the business of C (tax-exempt) if it is property involved in the business within the meaning given by section 107(6)(a).