Section 551 | Tax consequences of distribution to holder of excessive rights

(1)Subsection (3) applies if—

(a)a distribution is made to or in respect of a holder of excessive rights that is not an excluded holder (both as defined by section 553), and

(b)the distributor has not taken reasonable steps to prevent a distribution to or in respect of such a person from being made.

(2)“The distributor” means—

(a)in the case of a group UK REIT, the principal company of the group, and

(b)in the case of a company UK REIT, the company.

(3)The distributor is treated as receiving an amount of income calculated in accordance with section 552 (“the section 552 amount”).

(4)The section 552 amount is chargeable to corporation tax under the charge to corporation tax on income.

(5)It is treated—

(a)as arising in the accounting period in which the distribution was made, and

(b)as profits of residual business of the distributor.

(6)Accordingly, it is charged to corporation tax at the main rate of corporation tax.

(6)Repealed

(7)No loss, deficit, expense or allowance may be set off against the section 552 amount.