705HA Profit: calculating profits available for distribution

Summary

The purpose of this section is to ensure that any amounts deducted by a REIT in arriving at the profits available for distribution are amounts which have been incurred wholly and exclusively for the purposes of the property rental business. If any amounts do not meet this criteria then there are taxation consequences.

Details

(1) Any amount which has been taken into account by a REIT or group REIT for the purposes of calculating the aggregate profits which are not amounts which have been laid out wholly and exclusively for the purposes of the property rental business are referred to as a ‘disallowed amount’.

(2) The REIT or principal company of a group REIT will be treated as receiving an amount of income equal to the disallowed amount.

(3) The deemed amount of income treated as being received by the REIT or principal company of a group REIT is chargeable to corporation tax under Schedule D Case IV in the period in which the disallowed amount was taken into account. No offset against the deemed amount of income is allowed.

Relevant Date: Finance Act 2019