Part 12Real Estate Investment Trusts
Chapter 6Distributions
Distributions to certain shareholders
551Tax consequences of distribution to holder of excessive rights
1
Subsection (3) applies if—
a
a distribution is made to or in respect of a holder of excessive rights (as defined by section 553), and
b
the distributor has not taken reasonable steps to prevent a distribution to or in respect of such a person from being made.
2
“The distributor” means—
a
in the case of a group UK REIT, the principal company of the group, and
b
in the case of a company UK REIT, the company.
3
The distributor is treated as receiving an amount of income calculated in accordance with section 552 (“the section 552 amount”).
4
The section 552 amount is chargeable to corporation tax under the charge to corporation tax on income.
5
It is treated—
a
as arising in the accounting period in which the distribution was made, and
b
as profits of residual business of the distributor.
6
Accordingly it is charged to corporation tax at the rate mentioned in section 534(3) (rate at which profits of residual business are charged).
7
No loss, deficit, expense or allowance may be set off against the section 552 amount.