C1Part 3Trading income

Annotations:
Modifications etc. (not altering text)

Chapter 5Trade profits: rules allowing deductions

Contributions to local enterprise organisations or urban regeneration companies

82Contributions to local enterprise organisations or urban regeneration companies

1

This section applies if a company carrying on a trade (“the contributor”) incurs expenses in making a contribution (whether in cash or in kind)—

a

to a local enterprise organisation (see section 83), or

b

to an urban regeneration company (see section 86),

and a deduction would not otherwise be allowable for the expenses in calculating the profits of the trade.

2

In calculating the profits of the trade, a deduction is allowed under this section for the expenses.

3

But if, in connection with the making of the contribution, the contributor or a connected person—

a

receives a disqualifying benefit of any kind, or

b

is entitled to receive such a benefit,

the amount of the deduction is restricted to the amount of the expenses less the value of the benefit.

4

For this purpose it does not matter whether a person receives, or is entitled to receive, the benefit—

a

from the local enterprise organisation or urban regeneration company concerned, or

b

from anyone else.

5

Subsection (6) applies if—

a

a deduction has been made under this section, and

b

the contributor or a connected person receives a disqualifying benefit that is in any way attributable to the contribution.

6

An amount equal to the value of the benefit (so far as not brought into account in determining the amount of the deduction)—

a

is brought into account in calculating the profits of the trade, as a receipt arising in the accounting period in which the benefit is received, or

b

if the contributor has permanently ceased to carry on the trade before the benefit is received, is treated as a post-cessation receipt (see Chapter 15).

7

In this section “disqualifying benefit” means a benefit the expenses of obtaining which, if incurred by the contributor directly in a transaction at arm's length, would not be allowable as a deduction in calculating the profits of the trade.