Section 86A — Corporation Tax Act 2009: Contributions to flood and coastal erosion risk management projects

Contributions to flood and coastal erosion risk management projects 86A 1 This section applies if—

a a company carrying on a trade (“ the contributor ”) incurs expenses in making a qualifying contribution to a qualifying flood or coastal erosion risk management project, and b a deduction would not otherwise be allowable for the expenses in calculating the profits of the trade.

2 In determining whether the condition in subsection (1)(b) is satisfied, a deduction giving effect to a capital allowance is to be disregarded.

3 In calculating the profits of the trade, a deduction is allowed under this section for the expenses.

4 But if, in connection with the making of the contribution, the contributor or a connected person—

a receives a disqualifying benefit, or b is entitled to receive such a benefit, no deduction is allowed.

5 For the purposes of subsection (4) it does not matter whether a person receives, or is entitled to receive, the benefit—

a from the carrying out of the project, or b from any person.

6 Subsection (7) applies if—

a a deduction has been made under this section in relation to the contribution, and b the contributor or a connected person receives—

i a refund of any part of the contribution, if the contribution is a sum of money, or ii compensation for any part of the contribution, if the contribution is the provision of services, in money or money's worth.

7 The amount of, or an amount equal to the value of, the refund or compensation (so far as not otherwise brought into account in calculating the profits of the trade or treated as a post-cessation receipt)—

a is brought into account in calculating the profits of the trade, as a receipt arising in the accounting period in which the refund or compensation is received, or b if the contributor has permanently ceased to carry on the trade before the refund or compensation is received, is treated as a post-cessation receipt (see Chapter 15).

8 In this section “ disqualifying benefit ” means a benefit consisting of money or other property, but it does not include—

a a refund of the contribution, if the contribution is a sum of money;

b compensation for the contribution, if the contribution is the provision of services;

c a structure that—

i is or is to be used for the purposes of flood or coastal erosion risk management, and ii is put in place in carrying out the project;

d an addition to a structure where—

i the structure is or is to be used for the purposes of flood or coastal erosion risk management, and ii the addition is made in carrying out the project;

e land, plant or machinery that is or is to be used, in the realization of the project, for the purposes of flood or coastal erosion risk management;

f a right over land that is or is to be used, in the realization of the project, for the purposes of flood or coastal erosion risk management.

9 In subsection (8) “ structure ” includes road, path, pipe, earthwork, plant and machinery.