Corporation Tax Act 2009

Contributions to local enterprise organisations or urban regeneration companies

82 Contributions to local enterprise organisations or urban regeneration companies

(1) This section applies if a company carrying on a trade (“the contributor”) incurs expenses in making a contribution (whether in cash or in kind)—

(a) to a local enterprise organisation (see section 83), or

(b) to an urban regeneration company (see section 86),

and a deduction would not otherwise be allowable for the expenses in calculating the profits of the trade.

(2) In calculating the profits of the trade, a deduction is allowed under this section for the expenses.

(3) But if, in connection with the making of the contribution, the contributor or a connected person—

(a) receives a disqualifying benefit of any kind, or

(b) is entitled to receive such a benefit,

the amount of the deduction is restricted to the amount of the expenses less the value of the benefit.

(4) For this purpose it does not matter whether a person receives, or is entitled to receive, the benefit—

(a) from the local enterprise organisation or urban regeneration company concerned, or

(b) from anyone else.

(5) Subsection (6) applies if—

(a) a deduction has been made under this section, and

(b) the contributor or a connected person receives a disqualifying benefit that is in any way attributable to the contribution.

(6) An amount equal to the value of the benefit (so far as not brought into account in determining the amount of the deduction)—

(a) is brought into account in calculating the profits of the trade, as a receipt arising in the accounting period in which the benefit is received, or

(b) if the contributor has permanently ceased to carry on the trade before the benefit is received, is treated as a post-cessation receipt (see Chapter 15).

(7) In this section “disqualifying benefit” means a benefit the expenses of obtaining which, if incurred by the contributor directly in a transaction at arm’s length, would not be allowable as a deduction in calculating the profits of the trade.

83 Meaning of “local enterprise organisation”

(1) For the purposes of section 82 “local enterprise organisation” means—

(a) a local enterprise agency,

(b) a training and enterprise council,

(c) a Scottish local enterprise company, or

(d) a business link organisation.

(2) “Local enterprise agency” means a body for the time being approved as a local enterprise agency for the purposes of section 82 by the relevant national authority, that is to say by—

(a) the Secretary of State (in relation to England or Northern Ireland),

(b) the Scottish Ministers (in relation to Scotland), or

(c) the Welsh Ministers (in relation to Wales).

For further provision about approvals by the relevant national authority, see sections 84 and 85.

(3) “Training and enterprise council” means a body with which the Secretary of State has an agreement under which the body is to carry out the functions of a training and enterprise council.

(4) “Scottish local enterprise company” means a company with which—

(a) Scottish Enterprise, or

(b) Highlands and Islands Enterprise,

has an agreement under which the company is to carry out the functions of a local enterprise company.

(5) “Business link organisation” means a person authorised by or on behalf of the Secretary of State to use a trade mark designated by the Secretary of State for the purposes of this subsection.

84 Approval of local enterprise agencies

(1) The relevant national authority may approve a body as a local enterprise agency for the purposes of section 82 only if conditions A and B are met.

(2) But if those conditions are met, the body may be approved—

(a) whatever its status or structure, and

(b) even if it is not described as a local enterprise agency.

(3) Condition A is that the relevant national authority is satisfied—

(a) that the body’s sole aim is the promotion or encouragement of local enterprise, or

(b) that one of the body’s main aims is the promotion or encouragement of local enterprise and that it has or is about to have a separate fund for the sole purpose of pursuing that aim.

(4) For this purpose “local enterprise” means industrial and commercial activity or enterprise in a particular area in the United Kingdom, with particular reference to encouraging the formation and development of small businesses.

(5) Condition B is that the body is precluded from paying or transferring any of its income or profit directly or indirectly—

(a) to any of its members, or

(b) to any person charged with the control and direction of its affairs.

(6) The payment of—

(a) reasonable remuneration for goods, labour or power supplied or for services provided,

(b) reasonable interest on money lent, or

(c) reasonable rent for premises,

does not count as a payment or transfer of income or profit for the purposes of subsection (5).

85 Supplementary provisions with respect to approvals

(1) This section applies for the purposes of section 84.

(2) The relevant national authority may give a body approval that is conditional on its compliance with such requirements as to—

(a) accounts,

(b) provision of information, and

(c) other matters,

as the relevant national authority considers appropriate.

(3) If the relevant national authority approves a body on the basis that it has or is about to have a separate fund (see section 84(3)(b))—

(a) the approval must specify the fund, and

(b) section 82 applies only to a contribution to the body made wholly to or for the purposes of the fund.

(4) The relevant national authority must withdraw the approval of a body as a local enterprise agency if—

(a) condition A or B in section 84 is no longer met, or

(b) the body is failing to comply with a requirement imposed as a condition of its approval.

(5) The relevant national authority must give notice of withdrawal to the body concerned, specifying the date from which the withdrawal takes effect (which may be earlier than the date on which the notice is given).

86 Meaning of “urban regeneration company”

(1) For the purposes of section 82 “urban regeneration company” means any body of persons which the Treasury by order designates as an urban regeneration company for the purposes of that section.

(2) A body may be so designated only if—

(a) its sole or main function is to co-ordinate the regeneration of a specific urban area in the United Kingdom,

(b) it is expected to seek to perform that function by creating a plan for the development of that area and trying to secure that the plan is carried into effect, and

(c) in co-ordinating the regeneration of that area, it is expected to work together with some or all local or other public authorities which exercise functions in relation to the whole or part of that area.

(3) An order under this section may be framed so as to take effect on a date earlier than the making of the order, but not earlier than 3 months before the date on which the order is made.