188DL Conditions 1 and 2: claimant company in group of companies
(1) This section applies if—
(a) the claimant company makes a claim under section 188CB based on consortium condition 1 or 2, and
(b) the claimant company is a member of a group of companies.
(2) In determining the claimant company's relevant maximum for the overlapping period under section 188DD, the amount calculated at step 1 of that section is to be treated as reduced (but not below nil) by the group's potential relief.
(3) The group's potential relief is the sum of—
(a) the maximum amount of group relief for carried-forward losses that could be claimed by the claimant company for the claim period on claims under section 188CB based on the group condition, and
(b) the maximum amount of group relief under Part 5 that could be claimed by the claimant company for the claim period on claims under section 130 based on the group condition.
(4) Before determining the maximum amount of potential group relief for carried-forward losses or potential group relief under subsection (3) take account of any claim made before the claim mentioned in subsection (1) that—
(a) is a claim for group relief or group relief for carried-forward losses based on the group condition made by another member of the same group of companies as the claimant company, and
(b) is in relation to losses or other amounts surrendered.
188EB Limitation on amount of relief applying to all claims under section 188CC
(1) The amount of group relief for carried-forward losses to be given on a claim under section 188CC (“the current claim”) is limited to whichever is the lesser of—
(a) the amount mentioned in subsection (2),
(b) the amount mentioned in subsection (3), and
(c) the amount mentioned in subsection (4).
(2) The amount referred to in subsection (1)(a) is the unused part of the surrenderable amounts that are attributable to the specified loss-making period (see section 188EC).
(3) The amount referred to in subsection (1)(b) is the difference between—
(a) the claimant company's relevant maximum for the overlapping period (see section 188ED), and
(b) the amount of previously claimed group relief for carried-forward losses for the overlapping period (see section 188EE).
(4) The amount referred to in subsection (1)(c) is the potential Part 5 group relief amount (see section 188EF).
188EC Unused part of surrenderable amounts attributable to specified loss-making period
(1) The unused part of the surrenderable amounts that are attributable to the specified loss-making period is the amount equal to—
(a) the surrenderable amount for the overlapping period (see subsection (2)), less
(b) the amount of prior surrenders for that period (see subsections (3) to (5)).
(2) To determine the surrenderable amount for the overlapping period—
(a) take the proportion of the surrender period included in the overlapping period, and
(b) apply that proportion to the surrenderable amounts for the surrender period that are attributable to the specified loss-making period.
The surrenderable amount for the overlapping period is the amount given as a result of paragraph (b).
(3) To determine the amount of prior surrenders for the overlapping period—
(a) identify any prior claims for the purposes of this section (see subsection (4)), and
(b) take the steps set out in subsection (5) in relation to each such claim.
The amount of prior surrenders for the overlapping period is the total of the previously used amounts given at step 3 in subsection (5) for all the prior claims.
(4) A claim is a prior claim for the purposes of this section if—
(a) it is either—
(i) a claim under section 188CB by any company which relates to the amounts to which the current claim relates (as well as any other amounts), or
(ii) a claim under section 188CC by any company which relates to the same amounts to which the current claim relates,
(b) it is made before the current claim, and
(c) it has not been withdrawn.
(5) These are the steps referred to in subsection (3)(b) to be taken in relation to each prior claim.
Step 1 Identify the overlapping period for the prior claim.
Step 2 Identify any period that is common to the overlapping period for the current claim and the overlapping period for the prior claim. If there is a common period, go to step 3. If there is no common period, there is no previously used amount in relation to the prior claim (and ignore step 3).
Step 3 Determine the previously used amount of group relief for carried-forward losses in relation to the prior claim (see subsections (6) to (8)).
(6) To determine the previously used amount of group relief for carried-forward losses in relation to a prior claim made under section 188CB—
Step 1 Take the proportion of the overlapping period for the prior claim that is included in the common period identified at step 2 in subsection (5) in relation to that claim.
Step 2 Apply that proportion to the amount of group relief for carried-forward losses given on the claim.
Step 3 Multiply the amount arrived at under step 2 by the fraction set out in subsection (7).
(7) The fraction is—
AB
where—
A is the sum of the surrenderable amounts that are attributable to the specified loss-making period, and
B is the sum of all the surrenderable amounts.
(8) To determine the previously used amount of group relief for carried-forward losses in relation to a prior claim made under section 188CC—
(a) take the proportion of the overlapping period for the prior claim that is included in the common period identified at step 2 in subsection (5) in relation to that claim, and
(b) apply that proportion to the amount of group relief for carried-forward losses given on the prior claim.
The previously used amount of group relief for carried-forward losses in relation to the prior claim is the amount given as a result of paragraph (b).
188ED Claimant company's relevant maximum for the overlapping period
(1) The claimant company's relevant maximum for the overlapping period is determined as follows—
Step 1 Calculate the claimant company's relevant maximum for the claim period in accordance with section 269ZD(4).
Step 2 Deduct from that amount the sum of—
any deductions made by the company for the claim period
under section 45(4)(b) or 45B(4), or
under section 303B or 303D by virtue of section 304(5),
any deduction made by the company for the claim period under section 457(3) or 463H(5) of CTA 2009,
any deductions made by the company for the claim period under section 124(5), 124A(5) or 124C(6) of FA 2012, and
any deductions made by the company for the claim period which are deductions within any of paragraphs (a) to (i) and (k) of section 269ZD(3).
Step 3 Take the proportion of the claim period included in the overlapping period and apply that proportion to the amount arrived at under step 2.
(2) In step 2 of subsection (1)—
(a) in paragraph (a)(i), the references to deductions under section 45(4)(b) or 45B(4) do not include deductions that would be ignored for the purposes of section 269ZB by reason of—
(i) section 1209(3), 1210(5A) or 1211(7A) of CTA 2009 (losses of film trade),
(ii) section 1216DA(3), 1216DB(5A) or 1216DC(7A) of that Act (losses of television programme trade),
(iii) section 1217DA(3), 1217DB(5A) or 1217DC(7A) of that Act (losses of video game trade),
(iv) section 1217MA(3) or 1217MC(9) of that Act (losses of theatrical trade),
(v) section 1217SA(3) or 1217SC(9) of that Act (losses of orchestral trade),
(vi) section 1218ZDA(3) or 1218ZDC(9) of that Act (losses of museum or gallery exhibition trade),
(vii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(viii) section 269ZJ(1) (insurance companies: shock losses),
(ix) section 304(7) (certain losses of ring fence trades), or
(x) section 356NJ(2) (pre-1 April 2017 loss arising from oil contractor activities);
(b) in paragraph (b) the reference to a deduction under section 463H(5) does not include the deduction of a shock loss.
(3) If the amount of the claimant company's qualifying profits for the claim period (calculated in accordance with subsection (3A)) is less than the amount of the claimant company's deductions allowance for the claim period (determined in accordance with section 269ZD(6)), subsection (1) has effect as if step 1 was modified as follows—
Step 1 Calculate the claimant company's qualifying profits for the claim period in accordance with subsection (3A).
(3A) The claimant company’s “qualifying profits” for the claim period are—
(a) the amount given by paragraph (1) of step 1 in section 269ZF(3) in determining the company’s qualifying trading profits and qualifying non-trading profits for the period, less
(b) the amount given by paragraph (1) of step 2 in section 269ZF(3) in determining those profits for the period.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) Subsection (2) is to be ignored if subsection (3) applies.
188EE Previously claimed group relief for carried-forward losses
(1) To determine the amount of previously claimed group relief for carried-forward losses for the overlapping period—
(a) identify any prior claims for the purposes of this section (see subsection (2)), and
(b) take the steps set out in subsection (3) in relation to each such claim.
The amount of previously claimed group relief for carried-forward losses for the overlapping period is the total of the previously claimed amounts given at step 3 in subsection (3) for all the prior claims.
(2) A claim is a prior claim for the purposes of this section if—
(a) it is a claim under section 188CB or 188CC by the claimant company for group relief for carried-forward losses which would be given by way of a deduction from the company's total profits of the claim period,
(b) it is made before the current claim, and
(c) it has not been withdrawn.
(3) These are the steps referred to in subsection (1)(b) to be taken in relation to each prior claim.
Step 1 Identify the overlapping period for the prior claim.
Step 2 Identify any period that is common to the overlapping period for the current claim and the overlapping period for the prior claim. If there is a common period, go to Step 3. If there is no common period, there is no previously claimed amount in relation to the prior claim (and ignore step 3).
Step 3 Determine the previously claimed amount of group relief for carried forward losses in relation to the prior claim (see subsection (4)).
(4) To determine the previously claimed amount of group relief for carried-forward losses in relation to a prior claim—
(a) take the proportion of the overlapping period for the prior claim that is included in the common period identified at step 2 in subsection (3) in relation to that claim, and
(b) apply that proportion to the amount of group relief for carried-forward losses given on the prior claim.
The previously claimed amount of group relief for carried-forward losses in relation to the prior claim is the amount given as a result of paragraph (b).
(1) The potential Part 5 group relief amount is determined as follows—
Step 1 Calculate the maximum amount of group relief that could have been given to the claimant company under Part 5 in relation to losses or other amounts within section 99(1) which the surrendering company had for the specified loss-making period. In applying this step, ignore any lack of profits of the claimant company from which deductions could have been made as mentioned in section 137(1).
Step 2 Deduct from the amount arrived at under step 1 the amount of any group relief actually given to the claimant company under Part 5 in relation to losses or other amounts within section 99(1) which the surrendering company had for the specified loss-making period.
Step 3 Multiply the amount arrived at following step 2 by the fraction in subsection (2).
Step 4 Deduct from the amount arrived at following step 3 any group relief for carried-forward losses previously given to the claimant company on claims under section 188CC which are related to the current claim.
(2) The fraction referred to in step 3 is—
AB
where—
A is the sum of the losses or other amounts within section 99(1)(a), (c), (e), (f) and (g) which the surrendering company had for the specified loss-making period, and
B is the sum of the losses or other amounts within section 99(1) (a) to (g) which the surrendering company had for the specified loss-making period.
(3) References in subsection (2) to losses or other amounts are references to losses or other amounts only in so far as they were eligible for surrender under Chapter 2 of Part 5.
(4) A claim under section 188CC is related to the current claim if the surrendering company and the specified loss-making period are the same in relation to both claims.
(1) If two or more claims for group relief for carried-forward losses are made at the same time, for the purpose of section 188EC and 188EE treat the claims as made—
(a) in such order as the company making them may elect or the companies making them may jointly elect, or
(b) if no such election is made, in such order as an officer of Revenue and Customs may direct.
(2) For the purpose of step 3 in each of sections 188EC(5) and 188EE(3) the amount of group relief for carried-forward losses given on a prior claim is determined on the basis that relief is given on the claim before it is given on any later claim.
(3) If the use of any proportion mentioned in subsection (4), would, in the circumstances of a particular case, produce a result that is unjust or unreasonable, the proportion is to be modified so far as necessary to produce a result that is just and reasonable.
(4) The proportions are those found in—
(a) section 188EC(2)(a),
(b) step 1 in section 188EC(6),
(c) section 188EC(8)(a),
(d) step 3 in section 188ED(1), and
(e) section 188EE(4)(a).
188EH Sections 188EC and 188EE: meaning of “the overlapping period”
(1) In sections 188EC and 188EE “the overlapping period”, in relation to a claim for group relief for carried-forward losses, means the period that is common to the claim period and the surrender period (see Requirement 2 in section 188CB(3) and Requirement 2 in section 188CC(3)).
(2) But if during any part of the overlapping period the relief condition is not met, that part is treated as not forming part of the overlapping period but instead as forming—
(a) a part of the surrender period that is not included in the overlapping period, and
(b) a part of the claim period that is not included in the overlapping period.
(3) The relief condition is the condition on which the claim for group relief for carried forward losses is based, that is—
the group condition,
consortium condition 1,
consortium condition 2,
consortium condition 3, or
consortium condition 4.
188EI Condition 4: companies in link company's group
(1) Where—
(a) the claimant company makes a claim under section 188CC, and
(b) the claim is based on consortium condition 4
the amount of relief to be given on the claim is limited by subsections (2) and (3).
(2) There is a limit on the amount of group relief for carried-forward losses that can be given, in total, on relevant consortium claims made by the link company and group companies.
(3) That limit is the maximum amount of group relief for carried-forward losses that could be given to the link company on relevant consortium claims—
(a) assuming that no relevant consortium claims were made by group companies based on consortium condition 4,
(b) assuming that the link company was UK related, and
(c) ignoring any lack of profits of the link company from which deductions could be made as mentioned in section 188CK(1).
(4) In this section—
“consortium claim” means a claim made under section 188CC for group relief for carried-forward losses,
“group company” means a company that is a member of the same group of companies as the link company (other than the link company),
“relevant consortium claim” means a consortium claim in relation to which the surrendering company, the surrender period and the specified loss-making period are the same as is the case for the claim mentioned in subsection (1), and
“UK related”, in relation to a company, has the meaning given by section 188CJ.
188EJ Condition 3 or 4: surrendering company not controlled by claimant company etc
(1) This section applies if—
(a) the claimant company makes a claim under section 188CC for group relief for carried-forward losses,
(b) the claim is based on consortium condition 3, and
(c) during any part of the overlapping period, arrangements within subsection (3) are in place which enable a person to prevent the claimant company, either alone or together with one or more other companies that are members of the consortium, from controlling the surrendering company.
(2) This section also applies if—
(a) the claimant company makes a claim under section 188CC for group relief for carried-forward losses,
(b) the claim is based on consortium condition 4, and
(c) during any part of the overlapping period, arrangements within subsection (3) are in place which enable a person to prevent the link company, either alone or together with one or more other companies that are members of the consortium, from controlling the surrendering company.
(3) Arrangements are within this subsection if—
(a) the company, either alone or together with one or more other companies that are members of the consortium, would control the surrendering company, but for the existence of the arrangements, and
(b) the arrangements form part of a scheme the main purpose, or one of the main purposes, of which is to enable the claimant company to obtain a tax advantage under this Chapter.
(4) The relief to be given on the claim is to be determined as if the surrenderable amount for the overlapping period were 50% of what it would be but for this section (see section 188EC(2) to determine the surrenderable amount for the overlapping period).
(5) In this section “the overlapping period” is to be read in accordance with section 188EH.
(6) Section 1139 (“tax advantage”) applies for the purposes of this section.
188EK Condition 3 or 4: surrendering company in group of companies
(1) This section applies if—
(a) the claimant company makes a claim under section 188CC for group relief for carried-forward losses, and
(b) the surrendering company is a member of a group of companies.
(2) The surrendering company's surrenderable amounts for the surrender period that are attributable to the specified loss-making period are to be treated as reduced (but not below nil) by the relevant amount.
(3) To determine the relevant amount—
Step 1 Calculate the group's potential relief.
Step 2 Multiply the amount arrived at under step 1 by the fraction set out in subsection (6).
(4) The group's potential relief is the maximum amount of group relief for carried-forward losses that could be given if every claim that could be made based on the group condition in respect of the surrenderable amounts for the surrender period was in fact made (and for this purpose it is to be assumed that the maximum possible claim is made in each case).
(5) Before determining the maximum amount of potential group relief for carried-forward losses under subsection (4), take account of any claim made before the current claim that—
(a) is a claim for group relief for carried-forward losses based on the group condition, and
(b) is in relation to losses or other amounts surrendered by a member of the same group of companies as the surrendering company (other than the surrendering company itself).
(6) The fraction mentioned in step 2 in subsection (3) is—
AB
where—
A is the sum of the surrendering company's surrenderable amounts for the surrender period that are attributable to the specified loss-making period, and
B is the sum of all the surrendering company's surrenderable amounts for the surrender period.
188FA Payments for group relief for carried-forward losses
(1) This section applies if—
(a) the surrendering company and the claimant company have an agreement between them in relation to losses and other amounts of the surrendering company (“the agreed loss amounts”),
(b) group relief for carried-forward losses is given to the claimant company in relation to the agreed loss amounts, and
(c) as a result of the agreement the claimant company makes a payment to the surrendering company that does not exceed the total amount of the agreed loss amounts.
(2) The payment—
(a) is not to be taken into account in determining the profits or losses of either company for corporation tax purposes, and
(b) for corporation tax purposes is not to be regarded as a distribution.
Chapter 5 of Part 5 (which explains certain key concepts for the purposes of Part 5, including (in particular) how to determine if a company is a member of a group of companies or is a member of, or is owned by a consortium) applies for the purposes of this Part as it applies for the purposes of Part 5.
(1) In this Part “trading company” means a company the business of which consists wholly or mainly in the carrying on of a trade.
(2) In this Part “holding company” means a company the business of which consists wholly or mainly in the holding of shares or securities that—
(a) are its 90% subsidiaries, and
(b) are trading companies.
(1) In this Part—
“the claimant company” has the meaning given by section 188CB(2) or 188CC(2),
“the claim period” has the meaning given by section 188CB(2) or 188CC(2),
“company” means any body corporate,
“group relief for carried-forward losses” has the meaning given by section 188AA(4),
“profits” means income and chargeable gains, except in so far as the context otherwise requires,
“shock loss” has the meaning given by section 269ZK,
“Solvency 2 insurance company” means an insurance company as defined in section 269ZP(2),
“the specified loss-making period”, in relation to a claim for group relief for carried forward losses made under section 188CC, has the meaning given by subsection (2) of that section,
“the surrenderable amounts” has the meaning given by section 188BB(7),
“surrendering company” has the meaning given by 188BB(7), and
“the surrender period” has the meaning given by section 188BB(7).
(2) In this Part, except in so far as the context otherwise requires—
(a) references to a trade include an office, and
(b) reference to carrying on a trade include holding an office.
(1) Qualifying charitable donations made by a company are allowed as deductions from the company's total profits in calculating the corporation tax chargeable for an accounting period.
(2) They are deducted from the company's total profits for the period after any other relief from corporation tax other than group relief and group relief for carried-forward losses.
(3) The amount of the deduction is limited to the amount that reduces the company's taxable total profits for the period to nil.
(4) Except as otherwise provided, a deduction is allowed only in respect of qualifying charitable donations made by the company in the accounting period concerned.
(5) The above provisions are subject to Chapter 2A of this Part, section 939F and to any other express exceptions in the Corporation Tax Acts.
(1) The following are qualifying charitable donations for corporation tax purposes—
(a) payments which are qualifying payments for the purposes of Chapter 2 (certain payments to charity), and
(b) amounts treated as qualifying charitable donations under Chapter 3 (certain disposals of investments to charity).
(2) However, no payment that is otherwise deductible from total profits, or in calculating any component of total profits, is a qualifying charitable donation.
(1) A payment made to a charity by a company is a qualifying payment for the purposes of this Chapter if each of conditions A to F is met.
(2) Condition A is that the payment is a payment of a sum of money.
(3) Condition B is that the payment is not subject to a condition as to repayment (but see section 192).
(4) Condition C is that the company making the payment is not itself a charity.
(5) Condition D is that the payment is not disqualified under section 193 (associated acquisition etc by the charity).
(6) Condition E is that the payment is not disqualified under section 194 (certain distributions).
(7) Condition F is that the payment is not disqualified under section 195 (associated benefits).
(1) If—
(a) a company makes a payment to a charity (“the charitable payment”),
(b) the charity makes a payment to the company (“the repayment”), and
(c) each of conditions A to D is met,
the charitable payment is not subject to a condition as to repayment.
(2) Condition A is that the company is wholly owned by the charity, or by a number of charities that include the charity.
(3) Condition B is that the charitable payment is of an amount which the company estimates to be the amount necessary to reduce to nil the company's taxable total profits for the accounting period in which the payment is made (“the relevant period”).
(4) Condition C is that the only purpose for which the charity makes the repayment is to adjust the amount of the charitable payment so that it is of the amount actually necessary to reduce to nil the company's taxable total profits for the relevant period.
(5) Condition D is that the repayment is made no later than 12 months after the end of the relevant period.
(6) If subsection (1) applies—
(a) the repayment is not non-charitable expenditure for the purposes of section 493 or 515 of this Act or section 543(1)(f) of ITA 2007, ...
(aa) the repayment is not non-qualifying expenditure for the purposes of Chapter 9 of Part 13 (see section 661(5)), and
(b) paragraphs 56 and 62 (but not 64) of Schedule 18 to FA 1998 (supplementary claims or elections) apply to the repayment.
(1) A payment is disqualified under this section if—
(a) it is conditional on an acquisition of property by the charity from the company or a person associated with the company,
(b) it is associated with such an acquisition, or
(c) it is part of an arrangement involving such an acquisition.
(2) An acquisition by way of gift is to be ignored for the purposes of this section.
(1) A payment is disqualified under this section if it is to be regarded as a distribution by reason of any provision of the Taxes Acts (within the meaning of TMA 1970) except section 1020 (transfers of assets or liabilities treated as distributions).
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) A payment (other than a dividend) made by a company which is wholly owned by a charity is not to be regarded as a distribution for the purposes of subsection (1).
(1) A payment is disqualified under this section if—
(a) benefits are associated with the payment, and
(b) the restrictions on benefits associated with a payment are breached.
(2) Sections 196 to 198 apply for these purposes.
For the purposes of this Chapter a benefit is associated with a payment if—
(a) it is received by the company which made the payment or by a person associated with the company, and
(b) it is received in consequence of making the payment.
(1) For the purposes of this Chapter the restrictions on benefits associated with a payment are breached if condition A or B is met.
(2) Condition A is that the total value of the benefits associated with the payment exceeds the variable limit, which is—
(a) in a case where the amount of the payment is £100 or less, 25% of that amount, and
(b) in a case where the amount of the payment exceeds £100, the sum of £25 and 5% of the amount of the excess.
(3) Condition B is that the sum of the following total values is more than £2,500—
(a) the total value of the benefits associated with the payment, and
(b) the total value of the benefits (if any) associated with each relevant prior payment.
(4) A relevant prior payment is a payment—
(a) which has already been made by the company to the charity in the accounting period, and
(b) which is a qualifying payment.
(5) This section needs to be read with section 198.
198 Payments and benefits linked to periods of less than 12 months
(1) This section modifies the application of section 197(2) in relation to a payment if condition A, B, C or D is met.
(2) Condition A is that a benefit associated with the payment relates to a period of less than 12 months.
(3) Condition B is that a benefit associated with the payment consists of a right to receive benefits at intervals over a period of less than 12 months.
(4) Condition C is that a benefit associated with the payment is one of a series of benefits which are—
(a) received at intervals, and
(b) associated with a series of payments made at intervals of less than 12 months.
(5) Condition D is that—
(a) a benefit associated with the payment is not one of a series of benefits received at intervals, and
(b) the payment is one of a series of payments made at intervals of less than 12 months.
(6) If condition A, B or C is met, then for the purposes of section 197(2)—
(a) the value of the benefit is taken to be the annual equivalent of its actual value, and
(b) the amount of the payment is taken to be the annual equivalent of its actual amount.
(7) If condition D is met, the amount of the payment is taken for the purposes of section 197(2) to be the annual equivalent of its actual amount.
(8) The annual equivalent of the value of a benefit, or of the amount of a payment, is found as follows.
Step 1
Multiply the value or amount by 365.
Step 2
If condition A or B is met in relation to the benefit (and neither condition C nor condition D is met in relation to it) divide the result by the number of days in the period of less than 12 months referred to in subsection (2) or (as the case may be) subsection (3).
If condition C or D is met in relation to the benefit, divide the result by the average number of days in the intervals of less than 12 months referred to in subsection (4)(b) or (as the case may be) subsection (5)(b).
199 Payment attributed to earlier accounting period
(1) This section applies if—
(a) a company makes a qualifying payment,
(b) the company is wholly owned by a charity, and
(c) the company makes a claim for the payment (or part of it) to be treated as a qualifying charitable donation made in an accounting period falling wholly or partly within the period of 9 months ending with the date of the making of the payment.
(2) The payment (or part) is to be treated for corporation tax purposes as a qualifying charitable donation made in that accounting period and not in any later period.
(3) A claim must be made within the period of two years immediately following the accounting period in which the payment is made or such longer period as an officer of Revenue and Customs may allow.
(1) For the purposes of this Chapter a company is wholly owned by a charity if condition A or B is met.
(2) Condition A is that—
(a) the company has an ordinary share capital, and
(b) every part of that share capital is owned by a charity (whether or not the same charity).
(3) Condition B is that—
(a) the company is limited by guarantee, and
(b) every beneficiary of the company is or must be a charity or a company wholly owned by a charity.
(4) Ordinary share capital of a company is treated as owned by a charity if a charity—
(a) directly or indirectly owns that share capital within the meaning of Chapter 3 of Part 24, or
(b) would be taken so to own it if references in that Chapter to a body corporate included references to a charity which is not a body corporate.
(4A) In the case of a charity which is a registered club, ordinary share capital of a company is treated as owned by a charity if the charity beneficially owns that share capital.
(5) A beneficiary of a company is a person who—
(a) is beneficially entitled to participate in the company's divisible profits, or
(b) will be beneficially entitled to share in any of the company's net assets available for distribution on its winding up.
For the purposes of this Chapter a person is associated with a company if the person is connected with—
(a) the company, or
(b) a person connected with the company.
202B Restriction on relief for payments to community amateur sports clubs
(1) Subsection (2) applies if—
(a) one or more qualifying payments are made by a company to a registered club (“the club”) in an accounting period (“the current period”),
(b) the company is wholly owned, or controlled, by the club or by a number of charities which include the club, for all or part of that period, and
(c) inflated member-related expenditure is incurred by the company in that period.
(2) For the purposes of section 189 (relief for qualifying charitable donations), the total amount of those qualifying payments is treated as reduced (but not below nil) by the total amount of that inflated member-related expenditure.
(3) Subsection (4) applies if—
(a) the total amount of that expenditure exceeds the total amount of those payments, and
(b) the company made one or more qualifying payments to the club in an earlier accounting period ending not more than 6 years before the end of the current period.
(4) For the purposes of section 189, the total amount of the qualifying payments made in the earlier accounting period is treated as reduced (but not below nil) by the amount of the excess.
(5) If subsection (3)(b) applies in relation to more than one earlier accounting period—
(a) subsection (4) applies to treat amounts paid in later accounting periods as reduced in priority to amounts paid in earlier ones (until the excess is exhausted or all amounts have been reduced to nil), and
(b) in applying subsection (4) in relation to an accounting period, the reference to the excess is to be read as a reference to so much of it as exceeds the total amount of qualifying payments which, under that subsection, have previously been reduced to nil by the excess.
(6) For the purposes of subsections (3) and (4), a reference to the total amount of qualifying payments made in an earlier accounting period is to the total amount of those payments after—
(a) any reduction under subsection (2), and
(b) any previous reduction under subsection (4).
(7) Such adjustments must be made (whether by way of the making of assessments or otherwise) as may be required in consequence of subsections (4) to (6).
(8) Section 200 (company wholly owned by a charity) applies for the purposes of this section.
(9) For the purposes of this section, the club controls the company if it has the power to secure—
(a) by means of the holding of shares or the possession of voting power in relation to the company or any other company, or
(b) as a result of any powers conferred by the articles of association or other document regulating the company or any other company,
that the affairs of the company are conducted in accordance with the club's wishes.
(10) For the purposes of this section two or more charities (including the club) control the company if, acting together, they have the power to secure, as mentioned in paragraph (a) or (b) of subsection (9), that the affairs of the company are conducted in accordance with the wishes of those charities.
(11) In this section—
“charity” has the same meaning as in Chapter 2,
“qualifying payment” means a qualifying payment for the purposes of Chapter 2, and
“registered club” has the same meaning as in Chapter 2,
and any reference to a member of the club includes a reference to a person connected with a member of the club.
(1) This section applies for the purposes of section 202B.
(2) “Inflated member-related expenditure” means—
(a) employment expenditure incurred in respect of the employment of a member of the club, by the company, where that employment is otherwise than on an arm's length basis, or
(b) expenditure incurred on a supply of goods and services to the club by—
(i) a member of the club, or
(ii) a member-controlled body,
otherwise than on an arm's length basis.
(3) But if the features of an employment or supply which cause it to be otherwise than on an arm's length basis, when taken together, are more advantageous to the company than if the employment or supply had been on an arm's length basis, any expenditure incurred in respect of the employment or on the supply is not inflated member-related expenditure.
(4) A company is “member-controlled” if a member of the club has (or two or more members acting together have) the power to secure—
(a) by means of the holding of shares or the possession of voting power in relation to that or any other body corporate, or
(b) as a result of any powers conferred by the articles of association or other document regulating that or any other body corporate,
that the affairs of the company are conducted in accordance with the wishes of the member (or, as the case may be, members).
(5) A partnership is “member-controlled” if a member of the club has (or two or more members acting together have) the right to a share of more than half the assets, or of more than half the income, of the partnership.
(6) In this section any reference to a member of the club includes a reference to a person connected with a member of the club.
(7) For the purposes of subsection (2)(a), the Treasury may by regulations specify—
(a) descriptions of expenditure which is to be treated as employment expenditure incurred in respect of the employment of a member of a club;
(b) descriptions of expenditure which is not to be so treated.
(8) Section 1171(4) (orders and regulations subject to negative resolution procedure) does not apply to any regulations made under subsection (7) if a draft of the statutory instrument containing them has been laid before, and approved by a resolution of, the House of Commons.
(1) This section applies if—
(a) a company disposes of the whole of the beneficial interest in a qualifying investment to a charity,
(b) the disposal is otherwise than by way of a bargain made at arm's length,
(c) the company is not itself a charity, and
(d) the company makes a claim.
(2) The relievable amount is treated for corporation tax purposes as a qualifying charitable donation made by the company in the accounting period in which the disposal is made.
(3) No relief in respect of the disposal is to be given under section 105 of CTA 2009 (gifts of trading stock to charities etc).
(4) For the calculation of the relievable amount, see section 206.
(5) If the qualifying investment is a qualifying interest in land, this section is subject to—
section 213 (certificates),
section 214 (qualifying interests in land held jointly),
section 215 (calculation of relievable amount etc where joint disposal), and
section 216 (disqualifying events).
(1) In this Chapter “qualifying investment” means any of the following—
(a) shares or securities which are listed on a recognised stock exchange or dealt in on a designated market in the United Kingdom,
(b) units in an authorised unit trust,
(c) shares in an open-ended investment company,
(d) an interest in an offshore fund, and
(e) a qualifying interest in land.
(2) In this section—
“offshore fund” has the meaning given by section 355 of TIOPA 2010, and
“open-ended investment company” is to be read in accordance with sections 613 and 615.
(3) In paragraph (a) of subsection (1) “designated” means designated by an order made by the Commissioners for Her Majesty's Revenue and Customs for the purposes of that paragraph.
(4) An order under subsection (3)—
(a) may designate a market by name or by reference to a class or description of market,
(b) may vary or revoke a previous order under that subsection.
(1) In this Chapter “qualifying interest in land” means—
(a) a freehold interest in land in the United Kingdom, or
(b) a leasehold interest in land in the United Kingdom which is a term of years absolute.
This is subject to subsections (2) to (5).
(2) Subsection (3) applies if a company with a beneficial interest in a freehold or leasehold interest mentioned in subsection (1)(a) or (b) makes a disposal to a charity of—
(a) the whole of the beneficial interest, and
(b) an easement, servitude, right or privilege so far as benefiting the land in question.
(3) The disposal mentioned in subsection (2)(b) is regarded for the purposes of this Chapter as a disposal by the company of the whole of its beneficial interest in a qualifying interest in land separate from the disposal mentioned in subsection (2)(a).
(4) If a company which has a freehold or leasehold interest in land in the United Kingdom grants a lease for a term of years absolute to a charity of the whole or part of the land, the grant of the lease is regarded for the purposes of this Chapter as a disposal by the company of the whole of the beneficial interest in the leasehold interest so granted.
(5) Neither an agreement to acquire a freehold interest nor an agreement for a lease is a qualifying interest in land.
(6) In the application of this section to Scotland—
(a) references to a freehold interest in land are to the interest of the owner,
(b) references to a leasehold interest in land which is a term of years absolute are to a tenant's right over or interest in a property subject to a lease,
(c) references to an agreement for a lease do not include missives of let that constitute an actual lease, and
(d) the reference in subsection (4) to granting a lease for a term of years absolute is to granting a lease.
(1) If the disposal is a gift, the relievable amount is given by the formula—
V
+
I
C
-
B
where—
V is the value of the net benefit to the charity at, or immediately after, the time when the disposal is made (whichever is less),
IC is the amount of the incidental costs of making the disposal to the company making it, and
B is the total value of any benefits received in consequence of making the disposal by the company making the disposal or a person connected with the company.
(2) If the disposal is at an undervalue, the relievable amount is given by the formula—
E
+
C
-
B
where—
E is the amount (if any) by which V (as defined in subsection (1)) exceeds the amount or value of the consideration for the disposal,
C is given by subsection (4), and
B is as defined in subsection (1).
(3) But if the amount given by the formula in subsection (1) or (2) is a negative amount, the relievable amount is nil.
(4) C is found as follows.
Step 1
Calculate the consideration for which the disposal is treated as made for the purposes of TCGA 1992 as a result of section 257(2)(a) of that Act (in case of disposal to charity etc, consideration to be such that no gain or loss accrues).
Step 2
Find the excess (if any) of the amount calculated at step 1 over the amount or value of the consideration for the disposal.
If there is such an excess, C is the amount of that excess or, if less, the amount of the incidental costs of making the disposal to the company making it.
If there is no such excess, C is nil.
(5) This section needs to be read with—
(a) section 207 (incidental costs of making disposal),
(b) section 208 (consideration), and
(c) sections 209 to 212 (value of net benefit to charity).
References in section 206 to the incidental costs of making the disposal to the company making it are to—
(a) fees, commission or remuneration paid for the professional services of a surveyor, valuer, auctioneer, accountant, agent or legal adviser which are wholly and exclusively incurred by the company for the purposes of the disposal,
(b) costs of transfer or conveyance wholly and exclusively incurred by the company for the purposes of the disposal,
(c) costs of advertising to find a buyer, and
(d) costs reasonably incurred in making any valuation or apportionment required for the purposes of this Chapter.
If the disposal is at an undervalue, section 48 of TCGA 1992 (consideration due after time of disposal) applies in relation to the calculation of the relievable amount as it applies in relation to the calculation of a gain.
(1) For the purposes of this Chapter the value of the net benefit to a charity is—
(a) the relevant value of the qualifying investment, or
(b) if the charity is, or becomes, subject to a disposal-related obligation, the relevant value of the qualifying investment reduced by the total amount of the disposal-related liabilities of the charity.
(1A) In subsection (1) “ relevant value ” means—
(a) where subsection (1B) applies, the lower of the market value and the acquisition value, and
(b) otherwise, the market value.
(1B) This subsection applies where—
(a) the qualifying investment, or anything from which it derives or which it represents (whether in whole or in part and whether directly or indirectly), was acquired by the company making the disposal within the period of 4 years ending with the day on which the disposal is made,
(b) the acquisition was made as part of a scheme, and
(c) the main purpose, or one of the main purposes, of the company in entering into the scheme was to obtain relief, or an increased amount of relief, as a result of this Chapter.
(1C) In subsection (1B) “ scheme ” includes any scheme, arrangement or understanding of any kind, whether or not legally enforceable, involving a single transaction or two or more transactions.
(2) This section is supplemented by—
(a) section 210 (market value of qualifying investments),
(aa) section 210A (acquisition value of qualifying investments),
(b) section 211 (meaning of disposal-related obligation), and
(c) section 212 (meaning and amount of disposal-related liability).