(a)the profits of property rental business of members of the group F1..., and

(b)the profits of residual business of members of the group F2...

[F3(2A)Where the matters mentioned in section 533(1)(a) to (ca) must be specified in a financial statement under section 532(2)(a) or (c) in relation to each member of a group (see section 533(1C))—

(a)the reference in subsection (2)(a) to the profits of property rental business of members of the group are to those profits as shown in the financial statement under section 532(2)(a), and

(b)the reference in subsection (2)(b) to the profits of residual business of members of the group are to those profits as shown in the financial statement under section 532(2)(c).]

(3)“Aggregate profits”, in the case of a company, means the sum of—

(a)profits of property rental business of the company, and

(b)profits of residual business of the company.

(4)F4... References in subsections [F5(1) to (3)] to profits are to profits before deduction of tax, calculated in accordance with international accounting standards, and excluding—

(a)realised and unrealised gains and losses on the disposal of property,

(b)changes in the fair value of hedging derivative contracts (within the meaning given by section 599(4)), F6...

(c)items which are outside the ordinary course of the group's or, as the case may be, the company's business (irrespective of their treatment in the group's or company's accounts), having regard to that group's or company's past transactions[F7, and

(d)profits of residual business of the company or, as the case may be, group resulting from compliance with planning obligations entered into in accordance with section 106 of the Town and Country Planning Act 1990 in the course of the property rental business of the company or group.]

[F8(4A)In the case of a group, for the purposes of subsections (1) and (2) a distribution falling within section 549A(6) or (8) received by a member of the group is to be treated as profits of a property rental business in accordance with section 549A(1) notwithstanding section 549A(5).

(4B)In the case of a company, for the purposes of subsections (1) and (3) a distribution falling within section 549A(6) or (8) received by the company is to be treated as profits of a property rental business in accordance with section 549A(1) notwithstanding section 549A(5).]

[F9(5)Condition B is that at the beginning of the accounting period the sum of—

(a)the value of the assets relating to property rental business, and

(b)the value of the assets relating to residual business so far as consisting of cash [F10or relevant UK REIT shares ] ,

is at least 75% of the total value of assets held by the group or company (as the case may be).]

(6)For the purposes of condition B as it applies in the case of a group [F11, where the matters mentioned in section 533(1)(d) must be specified in a financial statement under section 532(2)(a) and (c) in relation to each member of the group (see section 533(1G))]—

(a)the amount shown in the financial statement under section 532(2)(a) as the amount of the assets of members of the group is to be treated as the amount of the assets relating to property rental business, and

(b)the amount shown in the financial statement under section 532(2)(c) as the amount of the assets of members of the group is to be treated as the amount of the assets relating to residual business [F12(and the amount of the group's cash [F13and relevant UK REIT shares ] is to be determined accordingly)] .

(7)For the purposes of condition B as it applies in the case of a company—

(a)an asset relates to property rental business if it would be shown as an asset if separate accounts were prepared for the property rental business,

(b)assets must be valued in accordance with international accounting standards,

(c)where international accounting standards offer a choice of valuation between cost basis and fair value, fair value must be used, and

(d)no account is to be taken of liabilities secured against or otherwise relating to assets (whether generally or specifically).

[F14(7A)References in subsections (5) to (7) to assets are to assets excluding—

(a)assets held solely in connection with the items mentioned in subsection (4)(b) and (c), and

(b)assets of residual business of members of the group or of the company held solely as a result of compliance with planning obligations entered into as mentioned in subsection (4)(d).]

[F15(8)In this section “cash” means—

(a)money held on deposit (whether or not in sterling),

(b)stocks or bonds of any description included in Part 1 of Schedule 11 to FA 1942 (gilts), or

(c)money held in any other way, or any investment of any other form, specified in regulations made by the Commissioners for Her Majesty's Revenue and Customs.]

[F16(9)In this section “relevant UK REIT shares” means—

(a)in the case of a group UK REIT, shares held by a member of the group in the principal company of another group UK REIT or in a company UK REIT, and

(b)in the case of a company UK REIT, shares held by the company in the principal company of a group UK REIT or in another company UK REIT.]