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(1)M1Notwithstanding anything in section 74, but subject to the provisions of this section, where a [F1company] carrying on a [F2trade or profession] makes any contribution (whether in cash or in kind) to an approved local enterprise agency, any expenditure incurred by [F3the company] in making the contribution may be deducted as an expense in computing the [F4profits] of the [F2trade or profession] for the purposes of [F5corporation] tax if it would not otherwise be so deductible.
(2)Where any such contribution is made by [F6a company with investment business] any expenditure allowable as a deduction under subsection (1) above shall for the purposes of section 75 be treated as expenses of management.
[F7(2A)Where any such contribution is made by a company in relation to which section 76 applies (expenses of insurance companies) any expenditure allowable as a deduction under subsection (1) above shall for the purposes of that section be treated as expenses payable which fall to be brought into account at Step 1 in subsection (7) of that section.]
(3)Subsection (1) above does not apply in relation to a contribution made by [F8any company if either the company or any person connected with the company] receives or is entitled to receive a benefit of any kind whatsoever for or in connection with the making of that contribution, whether from the agency concerned or from any other person.
(4)In this section “approved local enterprise agency” means a body approved by the Secretary of State for the purposes of this section; but he shall not so approve a body unless he is satisfied that—
(a)its sole objective is the promotion or encouragement of industrial and commercial activity or enterprise in a particular area in the United Kingdom with particular reference to encouraging the formation and development of small businesses; or
(b)one of its principal objectives is that set out in paragraph (a) above and it maintains or is about to maintain a fund separate from its other funds which is or is to be applied solely in pursuance of that objective;
and where the Secretary of State approves a body by virtue of paragraph (b) above, the approval shall specify the fund concerned and, in relation to a body so approved, any reference in this section to a contribution is a reference to a contribution which is made wholly to or for the purposes of that fund.
(5)M2A body may be approved under subsection (4) above whether or not it is a body corporate or a body of trustees or any other association or organisation and whether or not it is described as a local enterprise agency.
(6)A body may not be approved under subsection (4) above unless it is precluded, by virtue of any enactment, contractual obligation, memorandum or otherwise, from making any direct or indirect payment or transfer to any of its members, or to any person charged with the control and direction of its affairs, of any of its income or profit by way of dividend, gift, division, bonus or otherwise howsoever by way of profit.
(7)For the purposes of subsection (6) above, the payment—
(a)of reasonable remuneration for goods, labour or power supplied or for services rendered, or
(b)of reasonable interest for money lent, or
(c)of reasonable rent for any premises,
does not constitute a payment or transfer which is required to be so precluded.
(8)M3Any approval given by the Secretary of State may be made conditional upon compliance with such requirements as to accounts, provision of information and other matters as he considers appropriate; and if it appears to the Secretary of State that—
(a)an approved local enterprise agency is not complying with any such requirement, or
(b)one or other of the conditions for his approval contained in subsection (4) above or the precondition for his approval in subsection (6) above has ceased to be fulfilled with respect to an approved local enterprise agency,
he shall by notice withdraw his approval from the body concerned with effect from such date as he may specify in the notice (which may be a date earlier than the date on which the notice is given).
(9)In any case where—
(a)a contribution has been made [F9by a company] to an approved local enterprise agency in respect of which relief has been given under subsection (1) above, and
(b)any benefit received in any [F10accounting period] by [F11the company or any person connected with the company] is in any way attributable to that contribution,
[F12the company shall] in respect of that [F10accounting period] be charged to [F13corporation] tax under Case I or Case II of Schedule D or, if [F14the company] is not chargeable to [F13corporation] tax under either of those Cases for that period, under Case VI of Schedule D on an amount equal to the value of that benefit.
(10)Section 839 applies for the purposes of subsections (3) and (9) above.
(11)This section applies to contributions made on or after 1st April 1982 F15. . . .
Textual Amendments
F1Word in s. 79(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 48(2)(a) (with Sch. 2)
F2Words in s. 79(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 48(2)(b) (with Sch. 2)
F3Words in s. 79(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 48(2)(c) (with Sch. 2)
F4Words in s. 79(1) substituted (31.7.1998) by Finance Act 1998 (c. 36), s. 46(3)(a)(b), Sch. 7 para. 1
F5Word in s. 79(1) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 48(2)(d) (with Sch. 2)
F6Words in s. 79(2) substituted (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 1(2), Sch. para. 3(2)
F7S. 79(2A) inserted (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 1(2), Sch. para. 3(3)
F8Words in s. 79(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 48(3) (with Sch. 2)
F9Words in s. 79(9) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 48(4)(a) (with Sch. 2)
F10Words in s. 79(9) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 48(4)(b) (with Sch. 2)
F11Words in s. 79(9) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 48(4)(c) (with Sch. 2)
F12Words in s. 79(9) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 48(4)(d) (with Sch. 2)
F13Words in s. 79(9) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 48(4)(e) (with Sch. 2)
F14Words in s. 79(9) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 48(4)(f) (with Sch. 2)
F15Words in s. 79(11) repealed (28.7.2000) by Finance Act 2000 (c. 17), s. 88, Sch. 40 Pt. 2(9)
Modifications etc. (not altering text)
C1S. 79: functions transferred (1.7.1999 immediately after the coming into force of Scotland Act 1998 (c. 46), s. 53) by The National Assembly for Wales (Transfer of Functions) Order 1999 (S.I. 1999/672), arts. 1(2), 2, Sch. 1
C2S. 79(4)(8): functions transferred (1.7.1999) by The Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 1999 (S.I. 1999/1750), arts. 1(1), 2, Sch. 1 (with art. 7)
Marginal Citations
M1SOURCE-1982 s. 48(1)–(4)
M2SOURCE-1982 s. 48(5)
M3SOURCE-1982 s. 48(6)–(9)
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