Schedule 17
Finance Bill
6:30 pm
Edward Balls (Economic Secretary, HM Treasury; Normanton, Labour)
I am happy to explain the thinking behind all the amendments. As I said, we put the amendments out to consultation, and since their publication, the Law Society has made further representations on the technical details of the regime for demergers from UK REITs. The Government amendments will ensure that schedule 17 provisions relating to demergers within UK REITs apply where a demerged property or subsidiary is transferred to a new company that then becomes a UK REIT itself.
The amendments will ensure also that the terminology used to describe the demergers is consistent with that used elsewhere in UK REITs legislation by using the word “disposal” rather than “transfers”. Amendment Nos. 138 to 148 will mean that the provisions in paragraph 11 of schedule 17 will apply to a company that acquires a subsidiary company to which the ring-fenced assets have been transferred. The amendments allow also the company time to satisfy the conditions for entry to the UK REITs regime. That extends the same flexibility to disposals of ring-fenced assets by a single company UK REIT, as paragraph 16 proposes already for demergers from group UK REITs. That accords with our policy of aligning the treatment of single company and group UK REITs.
Amendments Nos. 149 to 158 will mean that the provision in paragraph 16 of schedule 17 will apply where a demerged company becomes a member of a new group UK REIT, rather than, as originally provided for, a parent of such a group. In summary, the amendments ensure that schedule 17 provisions relating to demergers from UK REITs have their intended scope and include additional flexibility. Just to be clear, amendments Nos. 138, 142, 146 and 147 substitute “disposal” for “transfer”, which will mean that the terminology in that part of the Bill is consistent with other sections of UK REITs legislation—for instance, section 125(2) of the Finance Act 2006, which deals with the movement of assets outside the ring fence, as well as chargeable gains legislation.