IFM30040 | Real Estate Investment Trust : Joint ventures: Joint Venture Look-Through Notice: cessation of look through treatment: CTA2010/S590

A joint venture look-through notice remains in effect until the venturing company or venturing group’s interest in the joint venture company or group falls below 40%, or the venturing company or group ceases to be a UK REIT. When that happens, the cessation provisions apply to the joint venture company or group in much the same way as they apply to a company that leaves a Group REIT, by virtue of CTA2010/S590, so that:

• the property rental business carried on by the joint venture company/members of the joint venture group ceases on the day the look-through notice ceases to be effective;

• the joint venture company/member of the joint venture group is deemed to have sold and immediately reacquired the assets involved in its property rental business on that day;

• chargeable gains and losses on the deemed sales are tax-exempt as they accrue to the property rental business part of the joint venture company/group; and

• transfer of the assets from the tax-exempt business of the joint venture company/member of the joint venture group takes place so as to give rise to no balancing charges or allowances.

As with companies leaving a Group REIT, the cessation, deemed sales etc. relate only to the proportion of the joint venture company/group owned by the venturing company (or group).

The Early Exit rules in CTA2010/S581 that apply to companies leaving a Group REIT within ten years of joining (see IFM26040) apply to joint venture companies and members of a joint venture group.

Accounting period of joint venture company ends

The venturing company’s (or venturing group’s) interest in the joint venture company or group may fall below 40% part way through an accounting period. When the look-through notice ceases to be effective, this brings to an end the accounting period of the joint venture company or group (CTA2010/S579) and the deemed sales, transfers etc take place on that day.

No carry forward of losses to post-notice periods

In the same way that losses etc arising in the property rental business cannot be carried forward to set off against profits post-cessation, neither can losses etc of the property rental business of the joint venture company or group that existed when the look-through notice was effective.