Part 13Tax avoidance

F1CHAPTER 8Tainted charity donations

Removal of reliefs and imposition of charge to tax

809ZOIncome tax charge where payment of trust income to charity

(1)

Income tax is charged under this section if—

(a)

a person makes a F2relievable charity donation in a tax year,

F3(aa)

the donation becomes a tainted donation (whether in that tax year or a later tax year),

(b)

the tainted donation or an associated donation is a payment by the trustees of a settlement of income arising under the settlement (“the trust donation”), and

(c)

the charity to which the trust donation is made is entitled to claim a repayment of tax in respect of that donation.

(2)

The amount of the tax charged under this section is equal to the amount of the repayment of tax which the charity is entitled to claim in respect of the trust donation (whether or not such a claim is made).

F4(2A)

Tax charged under this section is charged for the tax year in which the donation mentioned in subsection (1)(a) becomes a tainted donation.

(3)

Each of the persons mentioned in subsection (4) is liable for any tax charged under this section, and the liability of those persons is joint and several.

(4)

The persons are—

(a)

the trustees of the settlement who made the trust donation,

(b)

if different, the donor in respect of the tainted donation,

(c)

if section 628 or 630 of ITTOIA 2005 (gifts from settlor-interested trusts etc) applies in relation to the income out of which the trust donation is made, the settlor in relation to the settlement,

F5(d)

each linked person (as defined in section 809ZJ(3)) by reference to whom Condition B in section 809ZJ(5) is met in relation to the tainted donation,

(e)

any beneficiary of the settlement who is party to those arrangements, and

(f)

any charity to which the trust donation or (if different) the tainted donation is made, or any connected charity, which falls within subsection (5).

(5)

A charity falls within this subsection if—

(a)

the charity is or was party to F6the arrangements by reference to which Conditions A and B in section 809ZJ are met in relation to the tainted donation, and

F7(b)

the charity was aware or ought reasonably to have been aware, at the time it entered into those arrangements, that Condition B in section 809ZJ was or would be met by reference to the arrangements.

(6)

No liability to income tax arises under this section in respect of a repayment of tax if that repayment is itself repaid to the Commissioners for Her Majesty's Revenue and Customs under any other provision of the Tax Acts.

(7)

In this section—

“associated donation” has the same meaning as in section F8809ZMB;

“linked person” has the same meaning as in section 809ZJ;

F9...

“settlement” and “settlor” have the same meaning as in Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act).