(1)This Chapter makes provision about how this Part applies in relation to property rental business carried on—
(a)by a joint venture company (as defined by section 584), or
(b)by one or more members of a joint venture group (as defined by that section).
(2)Sections 586 and 587 are about the notice required for this Part to apply in relation to the property rental business; it is the giving of the notice that makes a group UK REIT or company UK REIT a venturing group or venturing company (see section 585).
(3)Sections 588 to 590 contain provision about the effect of the notice and its duration.
(4)The remainder of the Chapter contains—
(a)specific modifications and other provision relevant to the application of this Part (see sections 591 to 594),
(b)provision that in certain circumstances a joint venture company or a member of a joint venture group is (or is not) liable to a further charge to tax under section 538 (see sections 595 to 597), and
(c)provision about the interpretation of this Chapter (see section 598).
(1)In this Chapter “joint venture company” means a company carrying on property rental business (“the joint venture”) in circumstances where the condition in subsection (3) is met.
(2)In this Chapter “joint venture group” means a group of companies one or more of which is or are carrying on property rental business (“the joint venture”) in circumstances where the condition in subsection (3) is met.
(3)The condition is that an interest in the joint venture is held—
(a)by one or more members of a group UK REIT, or
(b)by a company UK REIT.
(1)In this Chapter “venturing group” means a group UK REIT the principal company of which has given a notice under section 586(1) or 587(1).
(2)In this Chapter “venturing company” means a company UK REIT which has given a notice under section 586(2) or 587(2).
(1)The principal company of a group UK REIT may give notice that this Part is to apply (in accordance with this Chapter) in relation to property rental business carried on by a joint venture company.
(2)A company UK REIT may give notice that this Part is to apply (in accordance with this Chapter) in relation to property rental business carried on by a joint venture company.
(3)A company may give a notice under subsection (1) or (2) only if the 40% tests are met in relation to the joint venture company.
(4)The 40% tests are met in a case within subsection (1) if members of the group UK REIT are together beneficially entitled to—
(a)at least 40% of the profits available for distribution to equity holders in the joint venture company, and
(b)at least 40% of the assets of the joint venture company available to equity holders in the event of a winding up.
(5)The 40% tests are met in a case within subsection (2) if the company UK REIT is beneficially entitled to—
(a)at least 40% of the profits available for distribution to equity holders in the joint venture company, and
(b)at least 40% of the assets of the joint venture company available to equity holders in the event of a winding up.
(6)A notice under subsection (1) or (2)—
(a)must specify the joint venture company concerned,
(b)may be given only with the consent of that joint venture company,
(c)must specify a date from which this Part is to apply in relation to the property rental business, and
(d)must be given in writing to an officer of Revenue and Customs before the date specified under paragraph (c).
(7)A company giving a notice under subsection (1) or (2) may do so—
(a)at the same time as giving a notice under section 523 or 524 (as the case may be), or
(b)at any later time when the group or company (as the case may be) is a UK REIT.
(8)See section 588 for provision about the effect of a notice under this section.
(1)The principal company of a group UK REIT may give notice that this Part is to apply (in accordance with this Chapter) in relation to property rental business carried on by one or more members of a joint venture group.
(2)A company UK REIT may give notice that this Part is to apply (in accordance with this Chapter) in relation to property rental business carried on by one or more members of a joint venture group.
(3)A company may give a notice under subsection (1) or (2) only if the 40% tests are met in relation to the joint venture group.
(4)The 40% tests are met in a case within subsection (1) if members of the group UK REIT are together beneficially entitled to—
(a)at least 40% of the profits available for distribution to equity holders in the principal company of the joint venture group, and
(b)at least 40% of the assets of the principal company of the joint venture group available to equity holders in the event of a winding up.
(5)The 40% tests are met in a case within subsection (2) if the company UK REIT is beneficially entitled to—
(a)at least 40% of the profits available for distribution to equity holders in the principal company of the joint venture group, and
(b)at least 40% of the assets of the principal company of the joint venture group available to equity holders in the event of a winding up.
(6)A notice under subsection (1) or (2)—
(a)must specify the principal company of the joint venture group concerned,
(b)may be given only with the consent of that principal company,
(c)must specify a date from which this Part is to apply in relation to the property rental business, and
(d)must be given in writing to an officer of Revenue and Customs before the date specified under paragraph (c).
(7)A company giving a notice under subsection (1) or (2) may do so—
(a)at the same time as giving notice under section 523 or 524 (as the case may be), or
(b)at any later time when the group or company (as the case may be) is a UK REIT.
(8)See section 589 for provision about the effect of a notice under this section.
(1)If a notice is given under section 586(1), this Part applies in relation to the property rental business carried on by the joint venture company as if the company were a member of the venturing group.
(2)If a notice is given under section 586(2), this Part applies in relation to the property rental business carried on by the joint venture company as if the venturing company and the joint venture company were the members of a new group UK REIT (a “deemed UK REIT”).
(3)For the purposes of subsections (1) and (2) references in this Part to a company which is a member of a group UK REIT include references to—
(a)the joint venture company, and
(b)in a case within subsection (2), the venturing company.
(4)For the purposes of subsection (3)—
(a)references in this Part to a UK company which is a member of a group UK REIT include references to a joint venture company which—
(i)is UK resident, and
(ii)is not resident in another place in accordance with the law of that place relating to taxation, and
(b)references in this Part to a non-UK company which is a member of a group UK REIT include references to a joint venture company which is not within paragraph (a).
(5)For the purposes of subsections (1) and (2) any reference in this Part to—
(a)entry, or
(b)a company becoming a member of a group UK REIT,
is to be read in relation to the joint venture company as a reference to the date specified under section 586(6)(c).
(6)For the purposes of subsection (2)—
(a)references in this Part to a UK REIT (or group UK REIT) include references to the deemed UK REIT, and
(b)references in this Part to the principal company of a group are to be read as references to the venturing company.
(1)If a notice is given under section 587(1), this Part applies in relation to the property rental business carried on by the member or members of the joint venture group as if each member of the group were a member of the venturing group.
(2)If a notice is given under section 587(2), this Part applies in relation to the property rental business carried on by the member or members of the joint venture group as if the venturing company and each member of the group were the members of a new group UK REIT (a “deemed UK REIT”).
(3)For the purposes of subsections (1) and (2) references in this Part to a company which is a member of a group UK REIT include references to—
(a)each member of the joint venture group, and
(b)in a case within subsection (2), the venturing company.
(4)For the purposes of subsection (3)—
(a)references in this Part to a UK company which is a member of a group UK REIT include references to a member of the joint venture group if the member is—
(i)UK resident, and
(ii)not resident in another place in accordance with the law of that place relating to taxation, and
(b)references in this Part to a non-UK company which is a member of a group UK REIT include references to any member of the joint venture group not within paragraph (a).
(5)For the purposes of subsections (1) and (2) any reference in this Part to—
(a)entry, or
(b)a company becoming a member of a group UK REIT,
is to be read in relation to a member of a joint venture group as a reference to the date specified under section 587(6)(c).
(6)For the purposes of subsection (2)—
(a)references in this Part to a UK REIT (or group UK REIT) include references to the deemed UK REIT, and
(b)references in this Part to the principal company of a group are to be read as references to the venturing company.
(1)A notice given under section 586(1) ceases to have effect if—
(a)the venturing group ceases to meet either of the 40% tests in relation to the joint venture company, or
(b)the venturing group ceases to be a UK REIT.
(2)A notice given under section 586(2) ceases to have effect if—
(a)the venturing company ceases to meet either of the 40% tests in relation to the joint venture company, or
(b)the venturing company ceases to be a UK REIT.
(3)A notice given under section 587(1) ceases to have effect if—
(a)the venturing group ceases to meet the 40% tests in relation to the joint venture group, or
(b)the venturing group ceases to be a UK REIT.
(4)A notice given under section 587(2) ceases to have effect if—
(a)the venturing company ceases to meet the 40% tests in relation to the joint venture group, or
(b)the venturing company ceases to be a UK REIT.
(5)If a notice under section 586 or 587 ceases to have effect, this Part ceases to apply as mentioned in section 588 or 589 (as the case may be) in relation to the joint venture company or joint venture group.
(6)But section 581 (early exit) continues to apply to a joint venture company or to the members of a joint venture group despite subsection (5).
(7)For the meaning of “the 40% tests” see—
(a)section 586, in the case of a notice given under that section, and
(b)section 587, in the case of a notice given under that section.
(1)This section applies if—
(a)a notice is given under section 586 in respect of a joint venture company, or
(b)a notice is given under section 587 in respect of a joint venture group.
(2)Condition A in section 531 (balance of business: profits) must be met in respect of the company or group in relation to each accounting period in relation to which the notice has effect.
(3)Condition B in section 531 (balance of business: assets) must be met in respect of the company or group at the beginning of each accounting period in relation to which the notice has effect.
(4)For the purposes of this section, section 531 applies—
(a)in the case of a joint venture company, as if it were a company which had given a notice under section 524, and
(b)in the case of a joint venture group, as if it were a group in respect of which a notice had been given under section 523.
(1)This section applies if a notice is given under section 587 in respect of a joint venture group.
(2)The principal company of the joint venture group must prepare financial statements for the group for each accounting period in relation to which the notice has effect.
(3)The reference in subsection (2) to financial statements is a reference to financial statements of a kind required under section 532(2).
(4)Sections 532(3) and 533 apply to the financial statements under subsection (2) as they apply to financial statements under section 532(2).
(5)Financial statements prepared under subsection (2) must be submitted to an officer of Revenue and Customs.
(6)Financial statements under subsection (2) are in addition to the provision required in respect of the members of the joint venture group (as a result of the application of this Part to the group) in financial statements under section 532.
(1)This section applies if a notice is given under section 587 in respect of a joint venture group.
(2)The amount to be included in the financial statements under section 532(2) in relation to a member of a joint venture group is the relevant percentage of profits, expenses, gains, losses, assets and liabilities of the member.
(3)“The relevant percentage” means—
(a)in a case where a notice was given under section 587(1), the percentage of the beneficial interest in the member that is held by members of the venturing group, and
(b)in a case where a notice was given under section 587(2), the percentage of the beneficial interest in the member that is held by the venturing company.
(4)Section 533 accordingly has effect in relation to the member as if for subsection (3) there were substituted subsections (2) and (3) of this section.
(1)Section 534(4) (profits) has effect in relation to a joint venture company or a member of a joint venture group as if for the words from “is to be treated” to the end there were substituted “is to be ignored for the purposes of this section”.
(2)Section 535(7) (gains) has effect in relation to a joint venture company or a member of a joint venture group as if for the words from “is to be treated” to the end there were substituted “is to be ignored for the purposes of this section”.
(1)A joint venture company is chargeable to tax under section 538 (entry charge) if, after the giving of a notice under section 586(2) in respect of the company, condition A or B is met.
(2)Condition A is met if—
(a)the company that gave the notice under section 586(2) becomes the principal company of a group UK REIT,
(b)it gives a notice under section 586(1) in respect of the joint venture company, and
(c)its shareholding in the joint venture company has increased (but not to 75% or more) between the giving of the two notices.
(3)Condition B is met if the company that gave the notice under section 586(2)—
(a)increases its shareholding in the joint venture company to at least 75%, and
(b)gives a notice under section 523 (such that the joint venture company becomes a member of the new group UK REIT resulting from the notice).
(4)A joint venture company is chargeable to tax under section 538 if, after the giving of a notice under section 586(1) in respect of the company, the venturer holding in the company increases to at least 75% (and accordingly the company becomes a member of the venturing group).
(5)“The venturer holding” means the sum of the beneficial interests in the joint venture company held by members of the venturing group.
(6)Tax is chargeable as a result of subsection (1) or (4) in respect of the reduced notional amount.
(7)“The reduced notional amount” means—
(a)an amount of notional income calculated in accordance with section 539, less
(b)the amount of notional income already charged to tax under section 538 when the notice under 586(1) or (2) (as the case may be) was first given in relation to the joint venture company.
(1)A member of a joint venture group (“MJVG”) is chargeable to tax under section 538 (entry charge) if, after the giving of a notice under section 587(2) in respect of the group, condition A or B is met.
(2)Condition A is that—
(a)the company that gave the notice under section 587(2) becomes the principal company of a group UK REIT,
(b)it gives a notice under section 587(1) in respect of the joint venture group, and
(c)its shareholding in MJVG has increased (but not to 75% or more) between the giving of the two notices.
(3)Condition B is that the company that gave the notice under section 587(2)—
(a)increases its shareholding in MJVG to at least 75%, and
(b)gives a notice under section 523 (such that MJVG becomes a member of the new group UK REIT resulting from the notice).
(4)A member of a joint venture group (“MJVG”) is chargeable to tax under section 538 if a venturing group increases its shareholding in MJVG to at least 75% (and accordingly MJVG becomes a member of the venturing group).
(5)Tax is chargeable as a result of subsection (1) or (4) in respect of the reduced notional amount.
(6)“The reduced notional amount” means—
(a)the amount of notional income calculated in accordance with section 539, less
(b)the amount of notional income already charged to tax under section 538 when the notice under section 587(1) or (2) was given or (as the case may be) when MJVG became a member of the joint venture group.
(1)A joint venture company is not chargeable to tax under section 538 (entry charge) in a case where—
(a)a company which has given a notice under section 586(2) (“notice A”) in respect of the joint venture company becomes the principal company of a group UK REIT,
(b)the company gives a notice under section 586(1) (“notice B”) in respect of the joint venture company, and
(c)the company’s shareholding in the joint venture company has not changed between the giving of notice A and notice B.
(2)A member of a joint venture group is not chargeable to tax under section 538 in a case where—
(a)a company which has given a notice under section 587(2) (“notice A”) in respect of the joint venture group becomes the principal company of a group UK REIT,
(b)the company gives a notice under section 587(1) (“notice B”) in respect of the joint venture group, and
(c)the company’s shareholding in the member of the joint venture group has not changed between the giving of notice A and notice B.
(1)References in this Chapter to an “equity holder”, in relation to a company, are to a person who—
(a)holds ordinary shares in the company, or
(b)is a loan creditor of the company in relation to a loan other than a normal commercial loan (as defined by section 162).
(2)Percentages of beneficial interest for the purposes of this Chapter are to be determined by reference to beneficial entitlement to profits available for distribution to equity holders.
(3)References in this Part to property rental business, in relation to a joint venture company or a company which is a member of a joint venture group, do not include the letting of property by the company to (as the case may be)—
(a)the venturing company in respect of the company, or
(b)a member of the venturing group in respect of the company.