Part 13Tax avoidance

F1CHAPTER 8Tainted charity donations

Removal of reliefs and imposition of charge to tax

809ZMRemoval of income tax relief F2where donation becomes tainted in same tax year

F3(1)

This section applies where—

(a)

a person makes a relievable charity donation, and

(b)

the donation becomes a tainted donation in the same tax year in which it is made.

(2)

Where (ignoring this Chapter) income tax relief would be available in respect of the tainted donation, that relief is not available.

F4(3)

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(4)

In this section—

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“income tax relief” means relief under—

(a)

section 63(2)(a), (aa) or (ab) of CAA 2001 (gifts of plant and machinery), so far as it applies in relation to income tax,

(b)

Part 12 of ITEPA 2003 (payroll giving),

(c)

section 108 of ITTOIA 2005 (gifts of trading stock),

(d)

Chapter 2 of Part 8 of this Act (gift aid), or

(e)

Chapter 3 of that Part (gifts of shares etc);

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(5)

Where entitlement to relief is withdrawn under this section in respect of a donation—

(a)

subsections (6) and (7) apply if the relief is under Chapter 2 of Part 8 (gift aid), and

(b)

subsection (8) applies if the relief is under Part 12 of ITEPA 2003 (payroll giving).

(6)

For the purposes of Step 2 in section 58(1), the donation is not a qualifying donation for the purposes of Chapter 2 of Part 8.

(7)

But—

(a)

the donation remains a qualifying donation for the purposes of—

(i)

Part 10 (special rules about charitable trusts etc),

(ii)

section 899(5) (meaning of “qualifying annual payment”),

(iii)

Chapter 2 of Part 11 of CTA 2010 (charitable companies: gifts and other payments),

(iv)

section 664 of that Act (community amateur sports clubs: exemption for interest and gift aid income), and

(b)

accordingly, section 414(2)(a) (donation treated as made after deduction of basic rate income tax) applies for the purposes of section 520(4) (income tax treated as deducted to be treated as income tax paid by charitable trust).

(8)

The donation remains a donation for the purposes of Part 12 of ITEPA 2003 for the purposes of—

(a)

section 521A (gifts under payroll deduction scheme: income tax liability and exemption), and

(b)

section 472A of CTA 2010 (gifts under payroll reduction scheme: corporation tax liability and exemption).