The Real Estate Investment Trusts (Assessment and Recovery of Tax) Regulations 2006

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations make provision for the assessment and recovery of tax arising on distributions made by Real Estate Investment Trusts.

Regulation 1 provides for citation, commencement and interpretation.

Regulation 2 contains an introduction to the remainder of the instrument.

Part 2 (comprising regulations 3 to 11) sets out the rules for the assessment and recovery of tax in the case of a Real Estate Investment Trust which is a company not forming part of a group to which Part 4 of the Finance Act 2006 (c. 25) applies.

Regulation 3 sets out the basic rule that, on making a relevant distribution the company must deduct a sum representing tax at the basic rate in force for the year in which it is made. It is subject to the exceptions in regulation 7.

Regulation 4 imposes a duty to deliver returns and account for tax in respect of relevant distributions.

Regulation 5 sets out when tax is due.

Regulation 6 provides for the supply of certificates of deduction of tax to be given by the company.

Regulation 7 provides that the payments specified there shall not be subject to deduction of tax. It also provides that where a payment is made without deduction of tax, but from which tax should have been deducted, the Regulations apply as if the payment were never one which could be made without deduction of tax.

Regulations 8 and 9 provides for assessments by officers of Revenue and Customs.

Regulation 10 provides for the application of the Income Tax Acts in respect of payments and assessments of tax.

Regulation 11 imposes an obligation to deliver an amended return if a mistake has been made in one already delivered.

Part 3 (containing regulation12) modifies the application of Part 2 in respect of groups to which Part 4 of the Finance Act 2006 applies and companies and groups to which that Part 4 formerly applied.

A regulatory impact assessment for the introduction of the UK REIT regime was published in March 2006 and may be found at www.hmrc.gov.uk/ria.