Section 135 FA 2006 adds a company that is a Real Estate Investment Trust to the list of companies in section 171(2) TCGA to which section 171(1) (transfer within a group: general provisions) do not apply. Note that where the parent company of a group elects to join the regime as a group (to which Part 4 FA 2006), it is the group as a whole that is a Real Estate Investment Trust – neither the principal company nor the subsidiary companies are individually a Real Estate Investment Trust. This means that section 135 FA 2006 applies only where the parent of a group has joined the regime as a single company.
Transfers of assets within a group under the provisions of
section 171 TCGA cannot be made where the transfer is between a
company that has joined the regime as a single company UK- REIT
(even though it is the parent of a group of companies) and another
member of its group. This is because section 135 FA 2006 adds a
company that is a Real Estate Investment Trust to
the list of companies in section 171(2) TCGA to which section
171(1) (transfer within a group: general provisions) do not apply.
Where a company with 75% subsidiaries joins the regime as a
single company UK-REIT, the principal company is covered by the
UK-REIT rules in Part 4 FA 2006 but its subsidiaries are not. In
this case, the parent company cannot transfer assets at no gain/ no
loss to its subsidiaries. Neither can the subsidiaries transfer
assets to the parent company at no gain/ no loss, but one
subsidiary can use section 171(1) to transfer an asset to another
subsidiary at no gain/ no loss.
The operation of section 171 TCGA for a Group REIT is covered by
section 136 FA 2006, and an example of how it works can be found
GREIT05050.
Section 135 FA 2006 (which deals with the application of
section 171 TCGA in the context of a Real Estate Investment Trust)
does not apply where the parent company of a group has given notice
to join the regime as the principal company of a Group REIT.
