REITs falling foul of tax rules

HMRC data suggests that the number of real estate investment trusts (REITs) in breach of the conditions for their special tax status has nearly quadrupled over the last year according to analysis by law firm BCLP (Bryan Cave Leighton Paisner). The firm reports that 26 breaches of the REITs tax regime were notified to HMRC in 2023/24 up from seven in the previous tax year. The number of REITs entering the special tax regime has increased in recent years following relaxation of the qualifying conditions which perhaps explains the rise in failures to operate within the rules as Elizabeth Bradley Partner at BCLP comments: ‘There has been a surge in the formation of private REITs since the abolition of the listing requirement. The relaxation of the REIT tax regime has encouraged more eligible investors to set up REITs but care needs to be...