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D7.1111 Cessation of 'pre-entry' business

Any property rental business the company was carrying on is deemed to cease at the point of entry to the regime¹. This applies to all companies whether or not UK resident.

Accordingly, the property rental business carried on subsequently is a new business, set up and commenced at the date of entry. Any tax losses attaching to the property rental business before entry will, therefore, lapse on entry to the regime. In addition, one accounting period is deemed to end and another to begin².

All properties involved in the property rental business of the 'incoming company' are deemed to be sold and immediately reacquired at market value³ by the company's business on entry to the REIT regime⁴.

It is not possible to elect for certain properties not to be treated as part of the property rental business. The deemed sale and reacquisition has effect for any future actual or deemed disposal of the asset⁵, unless the provisions of CTA 2010, s 556(2) (see D7.1115B)