Corporation Tax Bill

House of Commons

Session 2009 - 10
Internet Publications
Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Part 5 — Group relief
Chapter 7 — Miscellaneous provisions and interpretation of Part
99

(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
5
either company for corporation tax purposes, and
(b)
for corporation tax purposes is not to be regarded as a distribution.
184
References to “allowance” in CAA 2001
References in CAA 2001 (apart from Parts 6 and 10) to an allowance include
references to an allowance which would be made—
10
(a)
but for the giving of group relief, or
(b)
but for that and for a lack of profits or other income.
Interpretation
185
“Trading company” and “holding company”
(1)
In this Part “trading company” means a company the business of which
15
consists wholly or mainly in the carrying on of a trade or trades.
(2)
In this Part “holding company” means a company the business of which
consists wholly or mainly in the holding of shares or securities of companies
that—
(a)
are its 90% subsidiaries (see section 151), and
20
(b)
are trading companies.
186
When activities of a company are double taxation exempt
(1)
For the purposes of this Part activities of a company are double taxation
exempt for an accounting period if, because of double taxation arrangements,
the income and chargeable gains (if any) arising for that period from the
25
activities are to be ignored in determining the company’s chargeable profits for
that period.
(2)
In determining if any activities are double taxation exempt, assume that any
claim that must be made before effect is given to any provision of double
taxation arrangements is made.
30
(3)
“Double taxation arrangements” means arrangements which have effect under
section 2(1) of TIOPA 2010 (double taxation relief by agreement with territories
outside the United Kingdom).
187
“Non-UK tax”
(1)
In this Part “non-UK tax” means a tax chargeable under the law of a territory
35
outside the United Kingdom which—
(a)
is charged on income and corresponds to United Kingdom income tax,
or
(b)
is charged on income or chargeable gains or both and corresponds to
United Kingdom corporation tax.
40

Corporation Tax Bill
Part 6 — Charitable donations relief
Chapter 1 — Nature of relief
100

(2)
A tax is not outside the scope of subsection (1) by reason only that it—
(a)
is chargeable under the law of a province, state or other part of a
country, or
(b)
is levied by or on behalf of a municipality or other local body.
188
Other definitions
5
(1)
In this Part—
“the claimant company” has the meaning given by section 130(2) or 135(2)
(as the case may be),
“the claim period” has the meaning given by section 130(2) or 135(2) (as
the case may be),
10
“company” means any body corporate,
“group relief” has the meaning given by section 97(2),
“profits” means income and chargeable gains, except in so far as the
context otherwise requires,
“the surrenderable amounts” has the meaning given by section 99(7) or
15
113(5) (as the case may be),
“surrendering company” has the meaning given by section 99(7) or 113(5)
(as the case may be), and
“the surrender period” has the meaning given by section 99(7) or 113(5)
(as the case may be).
20
(2)
In this Part, except in so far as the context otherwise requires—
(a)
references to a trade include an office, and
(b)
references to carrying on a trade include holding an office.
Part 6
Charitable donations relief
25
Chapter 1
Nature of relief
189
Relief for qualifying charitable donations
(1)
Qualifying charitable donations made by a company are allowed as deductions
from the company’s total profits in calculating the corporation tax chargeable
30
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.
(3)
The amount of the deduction is limited to the amount that reduces the
company’s taxable total profits for the period to nil.
35
(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 any express exceptions in the Corporation
Tax Acts.
40

Corporation Tax Bill
Part 6 — Charitable donations relief
Chapter 2 — Certain payments to charity
101

190
Qualifying charitable donations: meaning
(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
5
(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.
Chapter 2
10
Certain payments to charity
Qualifying payments
191
Qualifying payments
(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.
15
(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
20
(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).
25
192
Condition as to repayment
(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,
30

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
35
total profits for the accounting period in which the payment is made (“the
relevant period”).

Corporation Tax Bill
Part 6 — Charitable donations relief
Chapter 2 — Certain payments to charity
102

(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
5
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, and
(b)
paragraphs 56 and 62 (but not 64) of Schedule 18 to FA 1998
10
(supplementary claims or elections) apply to the repayment.
193
Associated acquisition etc
(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,
15
(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.
194
Distributions
(1)
A payment is disqualified under this section if it is to be regarded as a
20
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)
In deciding whether a payment is to be regarded as a distribution for the
purposes of subsection (1), section 1002(2) is to be ignored.
25
(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).
195
Associated benefits
(1)
A payment is disqualified under this section if—
30
(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.
196
Associated benefits: meaning
For the purposes of this Chapter a benefit is associated with a payment if—
35
(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.