The Real Estate Investment Trusts (Joint Venture Groups) Regulations 2007
| Jurisdiction | UK Non-devolved |
2007 No. 3425
corporation tax
The Real Estate Investment Trusts (Joint Venture Groups) Regulations 2007
Made 4th December 2007
Laid before the House of Commons 5th December 2007
Coming into force 31th December 2007
The Treasury make the following Regulations in exercise of the powers conferred by sections 138 and 144 of, and paragraph 4 of Schedule 17 to, the Finance Act 20061.
PART 1
Preliminary provisions and interpretation
Citation, commencement and effect
1.—(1) These Regulations may be cited as the Real Estate Investment Trusts (Joint Venture Groups) Regulations 2007 and shall come into force on 31st December 2007.
(2) These Regulations shall have effect in relation to accounting periods that begin on or after 1st January 2007.
Structure of these Regulations
2. The structure of these Regulations is as follows—
this Part contains preliminary provisions and provides for interpretation;
Part 2 contains provisions which apply in the case of a single company to which Part 4 applies where the company carries on a joint venture with another person and the joint venture is conducted through a group of companies; and
Part 3 contains provisions which apply in the case of a company which is a member of a group to which Part 4 applies where the company has an interest in a joint venture carried on by another group of companies.
Interpretation: general
3.—(1) In these Regulations—
(a)
(a) a reference to Part 4 is a reference to Part 4 of the Finance Act 2006,
(b)
(b) a reference to a section (without more) is a reference to that section of the Finance Act 2006, and
(c)
(c) a reference to Schedule 17 is a reference to Schedule 17 to the Finance Act 2006.
(2) In these Regulations—
“equity holder” has the meaning it has in regulation 4(1);
“joint venture group” means—
(a) a group of companies determined in accordance with section 134(2) to (4) carrying on a joint venture between a company to which Part 4 applies and another person, or
(b) a group of companies determined in accordance with section 134(2) to (4) carrying on a joint venture in which a member of a group to which Part 4 applies has an interest;
“joint venture group look through notice” means—
(a) in the case of a company to which Part 4 applies, a notice given under regulation 5, and
(b) in the case of a group to which Part 4 applies, a notice given under regulation 17;
“JVG (property rental business)” has the meaning it has in regulation 4(3);
“JVG (residual)” has the meaning it has in regulation 4(3);
“principal company” in relation to a joint venture group means the principal company referred to in section 134(2);
“UK business of a joint venture group” is to be construed in accordance with regulation 4(5);
“UK resident company” is to be construed in accordance with regulation 4(6);
“venturing company” means the company referred to in regulation 5(1); and
“venturing group” means the group referred to in regulation 17(1).
Interpretation: specific terms
4.—(1) “equity holder” in relation to a member of a joint venture group means a person who—
(a)
(a) holds ordinary shares in the member, or
(b)
(b) is a loan creditor of the member in respect of a loan which is not a normal commercial loan within the meaning of paragraph 1(5) of Schedule 18 to the Income and Corporation Taxes Act 19882.
(2) References to profits or assets available for distribution to equity holders in a member of a joint venture group do not include a reference to any profits or assets available for distribution to an equity holder other than as such.
(3) In relation to a joint venture group—
(a)
(a) “JVG (property rental business)” means the group while a notice under regulation 5 or regulation 17 applies to it in so far as it carries on property rental business which satisfies Conditions 1 and 2 of section 107, as that section is modified by paragraph 6 of Schedule 173but with references to the group in that paragraph treated as references to the joint venture group, and
(b)
(b) “JVG (residual)” means the group in so far as it carries on business that is not property rental business.
(4) In relation to a member of a joint venture group, a reference to property rental business does not include property that is let by the member—
(a)
(a) to a venturing company which gives notice under regulation 5 in respect of that member, or
(b)
(b) to a member of a venturing group, where the principal company of the venturing group gives notice under regulation 17 in respect of that member.
(5) A reference to the UK business of a joint venture group is a reference to—
(a)
(a) the property rental business of the UK resident members of the group, and
(b)
(b) the property rental business in the United Kingdom of other members.
(6) A reference to a UK resident company is a reference to a company which—
(a)
(a) is resident in the United Kingdom, and
(b)
(b) is not resident in another place in accordance with the law of that place relating to taxation.
PART 2
Joint Venture Groups: Single Company Real Estate Investment Trusts
Notice
5.—(1) If the Conditions in regulation 6 are satisfied, a company to which Part 4 applies (“venturing company”) may give notice for these Regulations to apply.
(2) The notice (a “joint venture group look through notice”) must specify—
(a)
(a) the accounting period of the venturing company from the beginning of which these Regulations are to apply, and
(b)
(b) the principal company of the joint venture group to which these Regulations are to apply.
(3) The notice must be given in writing to the Commissioners for Her Majesty’s Revenue and Customs.
(4) The notice must be signed by the company secretary or a director of—
(a)
(a) the venturing company, and
(b)
(b) the principal company of the joint venture group to which these Regulations are to apply.
(5) A venturing company may give a joint venture group look through notice—
(a)
(a) at the same time as it gives notice under section 109 (notice to enter the Real Estate Investment Trust regime)4, or
(b)
(b) at any time when Part 4 applies to it.
(6) The notice must be given before the beginning of the specified accounting period.
This paragraph is subject to paragraphs (7) to (9).
(7) A venturing company may give, within a period of 60 days beginning with the day on which these Regulations come into force, a joint venture group look through notice in respect of an accounting period that began on or after 1st January 2007 but before the date on which these Regulations come into force.
Conditions for giving notice
6. The Conditions referred to in regulation 5(1) are as follows.
Condition 1
The venturing company is carrying on a joint venture with another person.
Condition 2
The joint venture takes the form of a joint venture group.
Condition 3
At least one member of the joint venture group is carrying on a property rental business as defined in section 104 and as construed in accordance with regulation 4(4).
Condition 4
The venturing company is beneficially entitled to 40% or more of the profits available for distribution to equity holders in the principal company of the joint venture group.
Condition 5
The venturing company is beneficially entitled to 40% or more of the assets of the principal company of the joint venture group available to equity holders in the event of a winding up.
Duration and effect of notice
7.—(1) On giving notice in accordance with regulation 5 these Regulations shall apply to the venturing company and shall continue to apply unless and until—
(a)
(a) the venturing company ceases to satisfy Condition 4 or 5 in regulation 6, or
(b)
(b) Part 4 ceases to apply to the venturing company for any reason.
(2) On giving notice in accordance with regulation 5 these Regulations shall apply to each company that is or becomes a member of the joint venture group and (other than regulation 16) shall continue to apply unless and until—
(a)
(a) the venturing company ceases to satisfy Condition 4 or 5 in regulation 6,
(b)
(b) Part 4 ceases to apply to the venturing company for any reason, or
(c)
(c) the member ceases to be a member of the joint venture group.
(3) Regulation 16 (early exit) shall continue to apply whether or not the circumstances are such that these Regulations otherwise cease to apply in accordance with this regulation.
(4) A notice under regulation 5 has effect—
(a)
(a) in relation to a venturing company, and
(b)
(b) for an accounting period of the venturing company,
only if the Conditions referred to in regulation 8 are satisfied by the joint venture group in relation to that accounting period.
Joint venture group: conditions for balance of business
8.—(1) This regulation applies where a joint venture group look through notice has been given under regulation 5 in respect of a joint venture group.
(2) The joint venture group, taken as a whole, must satisfy Condition 1 in section 108 (conditions for balance of business)5, as modified by paragraph 7 of Schedule 17—
(a)
(a) in the accounting period specified in the joint venture group look through notice, and
(b)
(b) in each subsequent accounting period.
(3) The joint venture group, taken as a whole, must satisfy Condition 2 in section 108 (conditions for balance of business), as modified by paragraph 7 of Schedule 17—
(a)
(a) at the beginning of the accounting period specified in the joint venture group look through notice, and
(b)
(b) at the beginning of each subsequent accounting period.
(4) For the purposes of this regulation—
(a)
(a) references in section 108 and in paragraph 7 of Schedule 17 to tax-exempt business shall be treated as references to the UK business of the joint venture...
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