The Real Estate Investment Trusts (Breach of Conditions) (Amendment) Regulations 2007

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Real Estate Investment Trusts (Breach of Conditions) Regulations 2006 (S.I. 2006/2864) (“the principal Regulations”).

These Regulations make provision for the consequences flowing from a breach of the conditions in Part 4 of the Finance Act 2006 (c. 25) (“the 2006 Act”), as amended by Schedule 17 to the Finance Act 2007 (c. 11).

Regulation 1 deals with the citation, commencement and effect. Authority for the retrospective effect of these Regulations is given by section 116(3A) of the 2006 Act which was inserted by paragraph 7 of Schedule 17 to the Finance Act 2007.

Regulation 2 introduces the amendments.

Regulation 3 amends regulation 1 of the principal Regulations.

Regulation 4 amends the heading to regulation 2 of the principal Regulations as a consequence of section 126A of the 2006 Act, inserted by paragraph 11 of Schedule 17 to the Finance Act 2007.

Regulation 5 substitutes new regulations 7, 7A and 7B for regulation 7 of the principal Regulations. New regulation 7 provides for the consequences of the breach of the asset condition in section 108(3) of the 2006 Act in the accounting period specified in the company’s notice under section 109 of the 2006 Act. New regulation 7A imposes a charge to tax on companies to which new regulation 7 applies. New regulation 7B provides for the consequences of the breach of the balance of business conditions in any accounting period following the accounting period specified in the company’s notice under section 109 of the 2006 Act.

Regulation 6 amends regulation 8 of the principal Regulations and provides for the consequences of multiple breaches of separate conditions in different sections of Part 4.

A regulatory impact assessment for the introduction of the UK-REIT regime was published in March 2006 and is available on the website of HM Revenue and Customs at www.hmrc.gov.uk/ria and may be obtained by writing to the Ministerial Correspondence Unit, 1^st Floor, HM Revenue and Customs, Ferrers House, P.O. Box 38, Castle Meadow Road, Nottingham, NG2 1BB.