Part 13Tax avoidance

F1CHAPTER 8Tainted charity donations

Removal of reliefs and imposition of charge to tax

F2809ZMBRemoval or clawback of income tax relief for associated donations

(1)

This section applies where—

(a)

a person makes a relievable charity donation that becomes a tainted donation, and

(b)

a person makes an associated donation in relation to the tainted donation.

(2)

If the donation mentioned in subsection (1)(a) becomes a tainted donation before the end of the tax year in which the associated donation is made, any income tax relief that would otherwise be available in respect of the associated donation is not available.

(3)

Section 809ZM(5) to (8) (treatment of donation where entitlement to relief is withdrawn) applies to the withdrawal of relief under subsection (2) as it applies to the withdrawal of relief under that section.

(4)

Subsection (5) applies where—

(a)

the donation mentioned in subsection (1)(a) becomes a tainted donation after the end of the tax year in which the associated donation is made, and

(b)

if the donation mentioned in subsection (1)(a) had become a tainted donation before the end of that tax year, the liability to income tax for that tax year of the person who made the associated donation would have been greater than it in fact was for that tax year.

(5)

Income tax is charged under this section, for the tax year in which the donation mentioned in subsection (1)(a) becomes a tainted donation, of an amount equal to the difference between—

(a)

the amount of income tax for which the person who made the associated donation would have been liable for the tax year in which the associated donation was made had the tainted donation become a tainted donation before the end of that tax year, and

(b)

the amount of income tax for which that person was in fact liable for the tax year in which the associated donation was made.

(6)

The person liable for tax charged under subsection (5) is the person who made the associated donation.

(7)

Subsection (5) does not apply in relation to an associated donation if the person who would be liable for tax charged under that subsection—

(a)

is already liable for tax charged under that subsection by reference to the tax year in which the associated donation was made, or

(b)

is liable for tax charged under section 809ZMA(2) by reference to that tax year,

and for that purpose the tax year “by reference to which” tax is charged is the earlier tax year for which the person’s liability falls to be considered under (as the case may be) subsection (5)(a) and (b) or section 809ZMA(2)(a) and (b).

(8)

Section 101 of FA 2009 (late payment interest) has effect in relation to tax charged under subsection (5) as though the tax had become due and payable on 1 February in the tax year following the one in which the associated donation was made.

(9)

In this section—

“associated donation”, in relation to a tainted donation, means a relievable charity donation made—

(a)

in accordance with the arrangements by reference to which Conditions A and B in section 809ZJ are met, and

(b)

by a person other than—

  1. (i)

    a qualifying charity-owned company in relation to that relievable charity donation, or

  2. (ii)

    a relevant housing provider linked (within the meaning of section 809ZJ(7)) with the charity to which that donation is made;

“income tax relief” has the same meaning as in section 809ZM;

“qualifying charity-owned company” has the meaning given by section 809ZJ(8) (except that paragraph (b) of that definition does not apply);

“relevant housing provider” has the meaning given by section 809ZJ(8).