Section 257A — Taxation of Chargeable Gains Act 1992: Tainted charity donations

Tainted charity donations 257A 1 Section 257 does not apply in relation to a relievable charity donation that becomes a tainted donation in the same tax year in which it is made.

2 Subsection (3) applies if—

a a person makes a relievable charity donation in a tax year (“the donation year”),

b the donation becomes a tainted donation in a later tax year ( “the tainting year” ),

and c if the donation had become a tainted donation in the donation year, the liability to tax for the donation year of the person who made the donation would have been greater than it in fact was for the donation year.

3 The liability to tax for the tainting year of the person that made the donation is increased by an amount equal to the difference between—

a the amount of tax for which the person would have been liable for the donation year had the donation become a tainted donation in the donation year, and b the amount of tax for which the person was in fact liable for the donation year.

4 Section 101 of FA 2009 (interest on CGT etc) has effect in relation to capital gains tax for which a person is liable by virtue of subsection (3) as though the tax had become due and payable on 1 February in the tax year following the donation year.

5 Section 87A of TMA 1970 (interest on overdue corporation tax etc) has effect in relation to corporation tax for which a company is liable by virtue of subsection (3) 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 of the company in which the donation mentioned in subsection (2)(a) was made.

6 In this section— “ relievable charity donation ” means a relievable charity donation within the meaning of Chapter 8 of Part 13 of ITA 2007 or Part 21C of CTA 2010; “ tainted donation ” means a tainted donation within the meaning of Chapter 8 of Part 13 of ITA 2007 or Part 21C of CTA 2010; “ tax ” means—

in relation to a company, corporation tax on chargeable gains; otherwise, capital gains tax; and a reference to a donation “becoming” a tainted donation is to be read with section 809ZJ(1)(b) of ITA 2007 and 939C(1)(b) of CTA 2010.

7 In relation to any donation made by a company, references in this section to a tax year are to be read as references to an accounting period.