 PKF Calls for Government to keep its nerve with REIT proposals
9 June 2011: With the informal consultation on the Government’s latest proposals to improve real estate investment trusts (REITs) closing tomorrow, PKF Accountants & business advisers calls on the Government to stick to its guns and guarantee UK REITs some serious tax breaks for the long term.
Marios Gregori, tax partner at PKF, comments, “The Government has suggested a number of practical ways to make converting to REIT status much more attractive and these are a positive development if they can be delivered.”
“At present there are only 23 REITs in the UK and most are very large businesses. Removing the current 2% conversion charge, allowing REITs to be listed on AIM or other exchanges, and relaxing the ‘good asset’ rules will certainly encourage medium-sized property businesses to consider adopting REIT status.”
“Currently institutional investors have to spread their risk of investing in UK property by buying into property companies and other vehicles that are not as tax-efficient as REITs. They can also invest in REITs overseas and, experience shows, often do. Allowing institutional investors to form UK REITs will be key to expanding the sector in the UK and increasing competition.”
“The main concern is that what now seem to be very common sense proposals will, when legislated, be hedged around with so many anti-avoidance rules that companies are deterred from converting. The Treasury and HMRC have to accept that the purpose of giving these tax breaks is for them to be used widely."
“Also, in the past we have seen other tax incentives abandoned because they have been too successful. That simply will not work for REITs: no company is going to convert unless it is sure that there are long term advantages.”
Marios Gregori added, “A strong and diverse REIT sector in the UK would be good for the economy in the long term. At a time when every penny of tax revenue is vital for the Government, it will take courage to allow wider the take-up of REIT tax breaks. But other European countries make REITs work for them and it is about time our Government took a longer term view.”
Ends
For further information, please contact:
Andy Konieczko, 020 7065 0537, andrew.konieczko@uk.pkf.com
Jane Murray, 020 7065 0135, jane.murray@uk.pkf.com
Notes to Editors:
1. PKF (UK) LLP is a leading firm of accountants and business advisers with more than 1,500 partners and staff operating in 23 offices in the UK mainland firm, incorporating a wholly-owned financial planning company and associated offshore practices. The firm specialises in advising growing and entrepreneurial/owner-managed businesses, AIM and fully listed companies, and also has extensive experience in the public and not-for-profit sectors. Principal services include assurance and advisory; taxation; consultancy; corporate recovery and insolvency; corporate finance and forensic. The firm has particular expertise in advising sectors such as hotels and leisure; mining and resource; public sector; real estate and construction; professional practices; not-for-profit; and medical. The firm’s web site is www.pkf.co.uk
2. PKF (UK) LLP also offers financial services through its FSA authorised company, PKF Financial Planning Limited. PKF (Isle of Man) LLC is a limited liability company registered in the Isle of Man. PKF (Guernsey) Limited is incorporated in Guernsey.
3. PKF (UK) LLP is a member firm of the PKF International Limited (PKFI) network of legally independent member firms. The PKFI member firms have around 2,200 partners and more than 21,000 staff in around 125 countries.
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