Corporation Tax Act 2010

564 Breach of condition as to distribution of profits

(1) Subsection (2) applies if the condition in section 530 (distribution of profits) is not met in relation to an accounting period.

(2) The breach is to be ignored; but the amount given by section 565 (“the section 565 amount”) is charged to corporation tax under the charge to corporation tax on income.

(3) The section 565 amount is to be treated as profits of residual business—

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

(b) of the company UK REIT,

as the case may be.

(4) Accordingly it is charged to corporation tax at the rate mentioned in section 534(3) (rate at which profits of residual business are charged).

(5) No charge to corporation tax arises under subsection (2) if—

(a) a distribution by way of dividend is made by the principal company or (as the case may be) by the company,

(b) the distribution is made within the relevant period, and

(c) as a result of the distribution the condition in section 530 is met in relation to the accounting period.

(6) In subsection (5)(b) the “relevant period” is the period of 3 months beginning with the date on which—

(a) in the case of a group UK REIT, the group’s UK profits (as defined by section 530(2)),

(b) in the case of a company UK REIT, the company’s profits from property rental business,

can no longer be altered.

(7) A distribution made as mentioned in subsection (5) is to be ignored in determining whether the condition in section 530 has been met in relation to another accounting period.

(8) Profits relating to a different accounting period are not to be taken into account in determining whether that condition has been met.

(9) No loss, deficit, expense or allowance may be set off against the section 565 amount.