Part 13Tax avoidance

F1CHAPTER 8Tainted charity donations

Tainted donations

809ZJTainted donations

(1)

For the purposes of this Chapter, a relievable charity donation

F2(a)

is a tainted donation if (and only if) Conditions A, B and C are met F3, and

(b)

becomes a tainted donation at the earliest time when all those conditions are met.

(2)

Condition A is that—

(a)

a linked person enters into arrangements (whether before or after the donation is made), and

(b)

it is reasonable to assume from either or both of—

(i)

the likely effects of the donation and the arrangements F4as at the later of the time when the donation is made and the time when the arrangements are entered into, and

(ii)

the circumstances in which the donation is made and the circumstances in which the arrangements are entered into,

that the donation would not have been made and the arrangements would not have been entered into independently of one another.

(3)

“Linked person” means—

(a)

the person who made the donation (“the donor”), or

(b)

a person connected with the donor at a relevant time.

(4)

In subsection (3) “relevant time” means F5any time after the earliest of the following times—

(a)

the time when the arrangements are entered into as mentioned in subsection (2);

(b)

the time when the relievable charity donation is made;

(c)

the time when the arrangements are first materially implemented.

F6(5)

Condition B is that a linked person who is not a charity receives financial assistance—

(a)

under or in connection with the arrangements, and

(b)

directly or indirectly from the charity to which the donation is made or from a connected charity.

(6)

Condition C is that the donor is not—

(a)

a qualifying charity-owned company, or

(b)

a relevant housing provider linked with the charity to which the donation is made.

(7)

For the purposes of subsection (6)(b) a relevant housing provider is linked with the charity if (and only if)—

(a)

one is wholly owned, or subject to control, by the other, or

(b)

both are wholly owned, or subject to control, by the same person.

(8)

In this section—

F7“financial assistance” includes a loan, a guarantee, an indemnity or any form of investment (in each case, whether or not on arm’s length terms);

“qualifying charity-owned company”, in relation to a relievable charity donation, means a company which—

(a)

is wholly owned by one or more charities, at least one of which is the charity to which the donation is made or a connected charity, and

(b)

has not previously been under the control of, and does not carry on a trade or business previously carried on by, one or more of the following—

  1. (i)

    a F8linked person;

  2. (ii)

    a person (other than a charity) who, at any time within the period of 4 years ending with the day on which paragraph (a) was first satisfied, was connected with a person who is a F8linked person;

“relevant housing provider” means a body which is—

(a)

a non-profit registered provider of social housing, or

(b)

entered on a register maintained under section 1 of the Housing Act 1996, section 20 of the Housing (Scotland) Act 2010 (asp 17) or Article 14 of the Housing (Northern Ireland) Order 1992 (S.I. 1992/1725 (N.I. 15)).

(9)

Section 200 of CTA 2010 (company wholly owned by a charity) applies for the purposes of subsection (8), and for those purposes references in that section to “charity” include a registered club within the meaning of section 658(6) of that Act.

(10)

This section is subject to section 809ZL (certain financial F9assistance to be ignored).