Section 257B — Taxation of Chargeable Gains Act 1992: Associated donations in relation to tainted charity donations

Associated donations in relation to tainted charity donations 257B 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, section 257 does not apply in relation to the associated donation.

3 Subsection (4) 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 had become a tainted donation before the end of that tax year, the liability to 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.

4 The liability to tax of the person who made the associated donation, for the tax year 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 tax for which the person would have been liable for the tax year in which the associated donation was made had the donation mentioned in subsection (1)(a) become a tainted donation before the end of that tax year, and b the amount of tax for which the person was in fact liable for the tax year in which the associated donation was made.

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

a is already liable for tax by virtue of that subsection by reference to the tax year in which the associated donation was made, or b is liable for tax by virtue of section 257A(3) by reference to that tax year, and for that purpose the tax year “by reference to which” a person is liable for tax is the earlier tax year for which the person’s liability falls to be considered under (as the case may be) subsection (4)(a) and (b) or section 257A(3)(a) and (b).

6 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 (4) as though the tax had become due and payable on 1 February in the tax year following the tax year in which the associated donation was made.

7 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 (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 of the company in which the associated donation was made.

8 In this section— “ associated donation ” means an associated donation within the meaning of section 809ZMB of ITA 2007 or section 939FB of CTA 2010; “ 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.

9 Where the associated donation mentioned in subsection (1)(b) is made by a company, references in this section to a tax year are to be read as references to an accounting period of the company.