PART XII SPECIAL CLASSES OF COMPANIES AND BUSINESSES

CHAPTER VI MISCELLANEOUS BUSINESSES AND BODIES

F1506ATransactions with substantial donors

1

This section applies to the following transactions—

a

the sale or letting of property by a charity to a substantial donor,

b

the sale or letting of property to a charity by a substantial donor,

c

the provision of services by a charity to a substantial donor,

d

the provision of services to a charity by a substantial donor,

e

an exchange of property between a charity and a substantial donor,

f

the provision of financial assistance by a charity to a substantial donor,

g

the provision of financial assistance to a charity by a substantial donor, and

h

investment by a charity in the business of a substantial donor.

2

For the purposes of this section a person is a substantial donor to a charity in respect of a chargeable period if—

a

the charity receives relievable gifts of at least £25,000 from him in a period of 12 months in which the chargeable period wholly or partly falls, or

b

the charity receives relievable gifts of at least £100,000 from him in a period of six years in which the chargeable period wholly or partly falls;

and if a person is a substantial donor to a charity in respect of a chargeable period by virtue of paragraph (a) or (b), he is a substantial donor to the charity in respect of the following five chargeable periods.

3

A payment made by a charity to a substantial donor in the course of or for the purposes of a transaction to which this section applies shall be treated for the purposes of section 505 as non-charitable expenditure.

4

If the terms of a transaction to which this section applies are less beneficial to the charity than terms which might be expected in a transaction at arm's length, the charity shall be treated for the purposes of section 505 as incurring non-charitable expenditure equal to that amount which the Commissioners for Her Majesty's Revenue and Customs determine as the cost to the charity of the difference in terms.

5

A payment by a charity of remuneration to a substantial donor shall be treated for the purposes of section 505 as non-charitable expenditure unless it is remuneration, for services as a trustee, which is approved by—

a

the Charity Commission,

b

another body with responsibility for regulating charities by virtue of legislation having effect in respect of any Part of the United Kingdom, or

c

a court.