Section 939FB — Corporation Tax Act 2010: Removal or clawback of corporation tax relief for associated donations

Removal or clawback of corporation tax relief for associated donations 939FB 1 This section applies where—

a a person makes a relievable charity donation that becomes a tainted donation, and b a company 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 accounting period of the company in which the associated donation is made, any corporation tax relief that would otherwise be available in respect of the associated donation is not available.

3 Subsection (4) applies where—

a the donation mentioned in subsection (1)(a) becomes a tainted donation after the end of the accounting period of the company 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 accounting period, the company’s liability to corporation tax for that accounting period would have been greater than it in fact was for that period.

4 The liability of the company to corporation tax for the accounting period in which the donation mentioned in subsection (1)(a) becomes a tainted donation is increased by an amount equal to the difference between—

a the amount of corporation tax for which it would have been liable for the accounting period in which the associated donation was made, had the tainted donation become a tainted donation before the end of that period, and b the amount of corporation tax for which it was in fact liable for the accounting period in which the associated donation was made.

5 Subsection (4) does not apply in relation to an associated donation if the company—

a is already liable for tax by virtue of that subsection by reference to the accounting period in which the associated donation was made, or b is liable for tax by virtue of section 939FA(2) by reference to that accounting period, and for that purpose the accounting period “by reference to which” the company is liable for tax is the earlier accounting period for which the company’s liability falls to be considered under (as the case may be) subsection (4)(a) and (b) or section 939FA(2)(a) and (b).

6 Section 87A of TMA 1970 (interest on overdue corporation tax etc) has effect in relation to tax for which a company is liable by virtue of subsection (4) as though the tax had become due and payable on the day following the expiry of 9 months from the end of the accounting period in which the associated donation was made.

7 In this section— “ associated donation ”, in relation to a tainted donation, means a relievable charity donation made—

in accordance with the arrangements by reference to which Conditions A and B in section 939C are met, and by a person other than—

a qualifying charity-owned company in relation to that relievable charity donation, or a relevant housing provider linked (within the meaning of section 939C(7)) with the charity to which that donation is made; “ corporation tax relief ” has the same meaning as in section 939F; “ qualifying charity-owned company ” has the meaning given by section 939C(8) (except that paragraph (b) of that definition does not apply); “ relevant housing provider ” has the meaning given by section 939C(8).