If the principal company of a Group REIT wants the group to
leave the UK-REIT regime, it does so by giving notice to HMRC
(section 128 as modified for groups by paragraph 23 Schedule 17 FA
2006). In practice, this notice should be sent to the tax office
that deals with the company.
There is no prescribed form for the notice: the only requirements are that it should be given in writing [or electronic equivalent] and it must specify the date on which the company wishes the regime to cease to apply to the group.
The date specified in the notice for cessation of the regime must be after the date of the notice. Note that under the cessation provisions in section 131 as modified for groups by paragraph 26 Schedule 17 FA 2006, the accounting periods of GM (tax-exempt) and GM (residual) will come to an end (see GREIT11310). (GM (tax-exempt) etc is the part of a group member that carries on tax-exempt business).
The rules for when and how HMRC can issue a notice to a Group REIT that the regime will cease to apply to it (section 129 FA 2006) are the same as for single company UK-REITs – see GREIT06025 – except that the notice is served on the principal company of the group and not on each or any of the group members.
If a group has been a UK-REIT for less than ten years, the
timing and/ or the consequences of leaving may be different. If the
principal company gives notice under section 128 FA 2006 for the
group to leave the regime, then the tax treatment of ring fence
assets sold within two years of leaving may be affected – see
The same rule applies if a company that has been a member of a Group REIT for less than ten years sells a tax-exempt property within two years of leaving the group.
If the termination was by HMRC giving notice under section 129 FA 2006, or automatic under section 130 FA 2006 as a result of breaching Company Conditions 1,2, 5 or 6, then the timing of leaving the regime and the tax consequences can be altered by direction of HMRC – see GREIT06045.