SCHEDULES
SCHEDULE 20F18CHARITABLE COMPANIES: QUALIFYING INVESTMENTS AND LOANS M1
Source—1986 c. 60 Sch. 7 Pts. II—IV.
PART I QUALIFYING INVESTMENTS
1
Investments specified in any of the following paragraphs of this Part of this Schedule are qualifying investments for the purposes of section 506.
2
Any investment falling within Part I, Part II, apart from paragraph 13 (mortgages etc.) or Part III of Schedule 1 to the M2Trustee Investments Act 1961.
3
Any investment in a common investment fund established under section 22 of the M3Charities Act 1960 F1, section 24 of the Charities Act 1993 or section 25 of the M4Charities Act (Northern Ireland) 1964 or in any similar fund established for the exclusive benefit of charities by or under any enactment relating to any particular charities or class of charities.
F93A
Any investment in a common deposit fund established under section 22A of the Charities Act 1960 F10or section 25 of the Charities Act 1993 or in any similar fund established for the exclusive benefit of charities by or under any enactment relating to any particular charities or class of charities.
4
Any interest in land, other than an interest held as security for a debt of any description.
5
6
Units, or other shares of the investments subject to the trusts, of a unit trust scheme within the meaning F4given by section 237(1) of the Financial Services and Markets Act 2000.
6A
Shares in an open-ended investment company.
7
1
Deposits with F5a bank in respect of which interest is payable at a commercial rate.
2
A deposit mentioned in sub-paragraph (1) above is not a qualifying investment if it is made as part of an arrangement under which a loan is made by the authorised institution to some other person.
F63
In this paragraph “bank” has the meaning given by section 840A.
7A
Uncertificated eligible debt security units as defined in section 552(2) of ITTOIA 2005.
8
Certificates of deposit as defined in F7section 56(5).
9
1
2
The reference in sub-paragraph (1) above to a loan includes a loan which is secured by a mortgage or charge of any kind over land.
PART II QUALIFYING LOANS
10
F111
For the purposes of section 506, a loan which is not made by way of investment is a qualifying loan if it consists of—
a
a loan made to another charity for charitable purposes only; or
b
c
money placed on current account with F12a bank otherwise than as part of such an arrangement as is mentioned in paragraph 7(2) above; or
F132
In this paragraph “bank” has the meaning given by section 840A.
F17F17PART III ATTRIBUTION OF EXCESS NON-QUALIFYING EXPENDITURE TO EARLIER CHARGEABLE PERIODS
Sch. 20 Pt. 3 (paras. 11-14) repealed (with effect in accordance with s. 55(5) of the repealing Act) by Finance Act 2006 (c. 25), s. 55(3), Sch. 26 Pt. 3(5)
11
This Part of this Schedule applies in the circumstances specified in subsection (6) of section 506 and in this Part—
a
“the primary period” means the chargeable period of the charity concerned in which there is such an excess as is mentioned in that subsection;
b
“unapplied non-qualifying expenditure” means so much of the excess referred to in that subsection as does not exceed the non-qualifying expenditure of the primary period; and
c
“earlier period”, in relation to an amount of unapplied non-qualifying expenditure, means any chargeable period of the charity concerned which ended not more than six years before the end of the primary period.
12
1
So much of the unapplied non-qualifying expenditure as is not shown by the charity to be the expenditure of non-taxable sums received by the charity in the primary period shall be treated in accordance with paragraph 13 below as non-qualifying expenditure of earlier periods.
2
In sub-paragraph (1) above “non-taxable sums” means donations, legacies and other sums of a similar nature which, apart from section 505(1) of this Act and section F16256 of the 1992 Act, are not within the charge to tax.
13
1
Where, in accordance with paragraph 12 above, an amount of unapplied non-qualifying expenditure (“the excess expenditure”) falls to be treated as non-qualifying expenditure of earlier periods—
a
it shall be attributed only to those earlier periods (if any) which, apart from the attribution, (but taking account of any previous operation of this paragraph) the relevant income and gains exceed the aggregate of the qualifying and non-qualifying expenditure incurred in that period; and
b
the amount to be attributed to any such earlier period shall not be greater than the excess of that period referred to in paragraph (a) above.
2
Where there is more than one earlier period to which the excess expenditure can be attributed in accordance with sub-paragraph (1) above, it shall be attributed to later periods in priority to earlier periods.
3
In so far as any of the excess expenditure cannot be attributed to earlier periods in accordance with this paragraph, it shall be disregarded for the purposes of section 506(6) (and this Part of this Schedule).
14
All such adjustments shall be made, whether by way of the making of assessments or otherwise, as may be required in consequence of the provisions of this Part of this Schedule.
Words in Sch. 20 heading substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 237(5) (with Sch. 2)