Part 10Special rules about charitable trusts etc

Substantial donor transactions

554Transactions: exceptions

(1)

A transaction within section 549(1)(b) or (d) is not a substantial donor transaction if an officer of Revenue and Customs determines that the transaction—

(a)

takes place in the course of a business carried on by the substantial donor,

(b)

is on terms which are no less beneficial to the charitable trust than those which might be expected in a transaction at arm’s length, and

(c)

is not part of an arrangement for the avoidance of any tax.

(2)

The provision of services to a substantial donor is not a substantial donor transaction if an officer of Revenue and Customs determines that those services are provided—

(a)

in the course of carrying out a primary purpose of the charitable trust, and

(b)

on terms which are no more beneficial to the substantial donor than those on which services are provided to others.

(3)

The provision of financial assistance to a charitable trust by a substantial donor is not a substantial donor transaction if an officer of Revenue and Customs determines that the assistance—

(a)

is on terms which are no less beneficial to the charitable trust than those which might be expected in a transaction at arm’s length, and

(b)

is not part of an arrangement for the avoidance of any tax.

(4)

Investment by a charitable trust in the business of a substantial donor is not a substantial donor transaction if the investment takes the form of the purchase of shares or securities listed on a recognised stock exchange.

(5)

The following are not substantial donor transactions—

(a)

a disposal at an undervalue in respect of which relief is available under section 431 or section 587B of ICTA (gifts of shares, securities and real property), or

(b)

a disposal at an undervalue to which section 257(2) of TCGA 1992 (gifts of chargeable assets) applies,

but such disposals may be taken into account in the application of section 549(2).