Taxes Consolidation Act 1997 section 705Q

Anti-avoidance provision

Section 705Q provides an anti-avoidance rule for transactions involving Real Estate Investment Trusts (REITs) and group REITs.

• The REIT tax exemptions do not apply to any transaction unless it has been undertaken for bona fide commercial reasons
• A transaction will also fall outside the REIT regime if it forms part of an arrangement or scheme whose main purpose, or one of its main purposes, is the avoidance of tax
• The rule applies to transactions entered into by, on behalf of, or to which a REIT or group REIT is directly or indirectly a party
• The anti-avoidance rule extends to cover a company or group before it became, or after it ceased to be, a REIT or group REIT, and to a company before it joined or after it left a group REIT