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					                     CONTENTS IN DETAIL

Introduction and What’s New. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
Obtaining Further Advice - and Disclaimer. . . . . . . . . . . . . . . . . . . . . . . . . . iv
Contents in Brief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
Contents in Detail. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Table of Cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxvi
Table of Statutes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Table of Statutory Instruments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Table of HMRC Manuals and Charity Commission Publications.. . . . . . . . . . .
Table of Abbreviations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 1
Policy Issues in Charity Taxation
    Introduction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
    Brief history of charity tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
    Policy reasons for reliefs for charities and donors to charity. . . . . . . . . 1.3
    Future developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4

CHAPTER 2
Definitions of “Charity”
    Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
    Charitable purposes (English law). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
    English law definition of charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
    New tax definition of charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
    Commencement of new tax definition of charity. . . . . . . . . . . . . . . . . . 2.5
    Definition of “charity” for tax purposes: the future. . . . . . . . . . . . . . . . 2.6
    The old tax definition of charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
    Charitable purposes condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8
    Jurisdiction condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
    Registration condition.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10
    Management condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.11
    “Managers”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
     “Fit and proper”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.13
    HMRC list of charities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.14
    Implications of 2010 reforms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.15
ii Contents in Detail

      Foreign charitable objects.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16
      Scots law definition of charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.17
      Northern Ireland law definition of charity. . . . . . . . . . . . . . . . . . . . . . 2.18
      Relations between HMRC and UK Charity Regulators. . . . . . . . . . . . 2.19
      Charity tax relief without charity commission supervision. . . . . . . . . 2.20
      Commentary: let’s have a UK-wide definition of charity.. . . . . . . . . . 2.21
      EU law- Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.22
      Free movement of capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.23
      Justification.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.24
      Freedom of establishment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.25
      Other aspects of EU law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.26
      Foreign (non-EU) charities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.27
      Classification of charities for tax purposes.. . . . . . . . . . . . . . . . . . . . . 2.28
      Temporary charities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.29
      Mixed charitable institutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.30
      Charity in course of liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.31

CHAPTER 3
Taxation of Charity Income
   Taxation of charity income - introduction. . . . . . . . . . . . . . . . . . . . . . . 3.1
   Meaning of “income”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2
   What income of a charity is taxable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3
   Rate of tax if no relief applies.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4
   Tax exemption: claims and appeal procedure.. . . . . . . . . . . . . . . . . . . . 3.5
   Dividends, interest, etc: general conditions for relief.. . . . . . . . . . . . . . 3.6
   Dividends and other distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7
   Interest, deeply discounted securities and unauthorised unit trusts. . . . 3.8
   Property income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9
   Industrial buildings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.10
   Life policies, annuities and capital redemption policies.. . . . . . . . . . . 3.11
   Offshore funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.12
   Miscellaneous income.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.13
   Miscellaneous minor exemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14
   Guaranteed returns on futures and options. . . . . . . . . . . . . . . . . . . . . . 3.15
   Swaps. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.16
   Public revenue dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.17
   Application for charitable purposes only. . . . . . . . . . . . . . . . . . . . . . . 3.18
   Accumulated income.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.19
   Income invested in breach of trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.20
   Tax avoidance motive. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.21
   When must income be applied for charitable purposes?. . . . . . . . . . . 3.22
   Properly invested income later applied for non-charitable purposes. . 3.23
                                                                                 Contents in Brief         iii

      Which funds must be applied for charitable purposes?. . . . . . . . . . . . 3.24
      Deemed income.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.25
      Application for charitable purposes rule: commentary.. . . . . . . . . . . . 3.26
      Deduction at source.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.27
      Registered Social Landlords. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.28
      Income of contemplative orders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.29

CHAPTER 4
Taxation of Charity Capital Gains
   CGT relief for charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1
   Sale of property held by charity subject to mortgage to non-charity. . . 4.2
   Identifying the gain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
   When must gain be applied for charitable purposes?. . . . . . . . . . . . . . . 4.4
   Deemed gains. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5
   Section 13 TCGA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6
   Property ceasing to be subject to charitable trusts. . . . . . . . . . . . . . . . . 4.7
   Allowable losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8
   Rate of tax on gains if no relief applies. . . . . . . . . . . . . . . . . . . . . . . . . 4.9

CHAPTER 5
Charitable Expenditure Rules
   Introduction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
   Charitable expenditure rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2
   Non-exempt amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
   Attributable/relievable income and gains. . . . . . . . . . . . . . . . . . . . . . . . 5.4
   “Non-charitable” expenditure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5
   “Expenditure”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6
   Payment to a foreign body. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7
   Approved charitable investments and loans. . . . . . . . . . . . . . . . . . . . . . 5.8
   Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.9
   Meaning of “approved charitable investments” or “qualifying. . . . . . 5.10
   Type 1 to 11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
   Other investments: Type 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12
   The benefit test: “Made for the benefit of the charity” . . . . . . . . . . . . 5.13
   The tax avoidance test.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.14
   Meaning of “approved charitable loan”. . . . . . . . . . . . . . . . . . . . . . . . 5.15
   Minutes record keeping and documentation. . . . . . . . . . . . . . . . . . . . . 5.16
   Claims and appeals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.17
   Trading losses of primary purpose trade.. . . . . . . . . . . . . . . . . . . . . . . 5.18
   Trading losses of non-primary purpose trade: charitable companies. . 5.19
   Trading losses: charitable trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.20
   Timing of expenditure.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.21
iv Contents in Detail

      Clearance procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.22
      Attribution to non-exempt amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.23
      Non-charitable expenditure: the carry-back rule . . . . . . . . . . . . . . . . . 5.24

CHAPTER 6
Substantial Donor Rules
   Substantial donor rules - introduction.. . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
   Prospective repeal of substantial donor rules. . . . . . . . . . . . . . . . . . . . . 6.2
   “Substantial Donor”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3
   “Relievable” gifts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
   Substantial donor transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
   Exceptions to substantial donor transactions. . . . . . . . . . . . . . . . . . . . . 6.6
   “If an officer of Revenue & Customs determines”. . . . . . . . . . . . . . . . . 6.7
   Operation of substantial donor provisions. . . . . . . . . . . . . . . . . . . . . . . 6.8
   Prohibited payment rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
   Non-beneficial transaction rule.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10
   Position of substantial donor.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
   Remuneration to substantial donor. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12
   Connected charity rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
   Connected donor rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.14
   Transactions before 22 March 2006. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.15
   Substantial donor rules: criticism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.16

CHAPTER 7
Tainted Donation Rules
    Tainted donation rules - introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
    Relievable charity donation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
    “Tainted donation”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3
    Tainted donation condition A (donation-arrangement). . . . . . . . . . . . . 7.4
    Tainted donation condition B (purpose of arrangement). . . . . . . . . . . . 7.5
    “Obtains a financial advantage from the charity”.. . . . . . . . . . . . . . . . . 7.6
    Disregarded financial advantages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7
    Tainted donation condition C (charity-owned companies).. . . . . . . . . . 7.8
    Consequence of tainted donation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9
    Income tax charge where gift aid is withdrawn. . . . . . . . . . . . . . . . . . 7.10
    Trust donation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
    “Connected”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.12
    Application of tainted donation rules to CGT. . . . . . . . . . . . . . . . . . . 7.13
    Application of tainted donation rules to CASCs. . . . . . . . . . . . . . . . . 7.14
    What is the reason for the tainted donation rules?. . . . . . . . . . . . . . . . 7.15
                                                                                   Contents in Brief          v



CHAPTER 8
Trading by Charities
   Trade carried on by charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1
   What is a trade?.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2
   Power to trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3
   Ascertaining the profits of a charity trade. . . . . . . . . . . . . . . . . . . . . . . 8.4
   Tax exemptions for trading income: summary. . . . . . . . . . . . . . . . . . . . 8.5
   Primary purpose trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6
   Beneficiary worker trade.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7
   Lotteries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8
   Application for purposes of the charity. . . . . . . . . . . . . . . . . . . . . . . . . 8.9
   Post-cessation receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10
   Fundraising event. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.11
   Small-scale trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.12
   Tax planning for non-exempt trades: summary. . . . . . . . . . . . . . . . . . 8.13
   Minimum charge and voluntary donation. . . . . . . . . . . . . . . . . . . . . . . 8.14
   Converting trading income into annual payments: use of trading. . . . 8.15
   Franchising. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.16
   Commentary: let’s extend the charity trading exemption.. . . . . . . . . . 8.17

CHAPTER 9
Trading Companies Held by Charities
   Trading companies - Introduction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1
   Extracting profits by Gift Aid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2
   Carry-back relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3
   Maximum permitted donation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4
   Donation exceeding distributable profits. . . . . . . . . . . . . . . . . . . . . . . . 9.5
   Furniss v Dawson. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6
   Financing and operating the trading company. . . . . . . . . . . . . . . . . . . . 9.7
   Returning Gift Aid payments - circular arrangements. . . . . . . . . . . . . . 9.8
   Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.9
   Transfer pricing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
   VAT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11

CHAPTER 10
Business Sponsorship and Advertising
   Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1
   When is business sponsorship a trade?. . . . . . . . . . . . . . . . . . . . . . . . . 10.2
   Primary purpose exemption for sponsorship income. . . . . . . . . . . . . . 10.3
   VAT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4
vi Contents in Detail



HAPTER 11
Corporate Charities
   Distinctions between charitable companies and trusts. . . . . . . . . . . . . 11.1
   Corporate charity: group relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2
   Definition of close company.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3
   When is a charitable company close?. . . . . . . . . . . . . . . . . . . . . . . . . . 11.4
   When is a subsidiary of a charity close?.. . . . . . . . . . . . . . . . . . . . . . . 11.5
   Significance of charity being a close company.. . . . . . . . . . . . . . . . . . 11.6
   Charity a close investment-holding company. . . . . . . . . . . . . . . . . . . . 11.7
   Loan relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.8

CHAPTER 12
Taxation of Employees & Beneficiaries of Charities
   Taxation of employees of charities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1
   PAYE and charities.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2
   Taxation of volunteers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
   Taxation of beneficiary of charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4

CHAPTER 13
Extracting Value From Companies
    Scope of chapter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1
    Extraction of profits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2
    Loans.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3
    Pre-acquisition profits.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4
    Extraction of assets from company: liquidation. . . . . . . . . . . . . . . . . . 13.5
    Capital asset – no liquidation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.6
    Distribution of trading stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.7

CHAPTER 14
Acquisition of Companies
   Scope of chapter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1
   Charitable expenditure rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2
   Transactions in securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.3
   TIS CT rules - introduction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.4
   "Transaction in securities". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.5
   “Corporation tax advantage”.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.6
   The motive defence.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.7
   CT Circumstance C: receipt of distributable consideration .. . . . . . . . 14.8
   CT Circumstance D (relevant company distribution).. . . . . . . . . . . . . 14.9
   CT Circumstance E. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.10
   TIS IT rules - Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.11
                                                                                  Contents in Brief          vii

      “Income tax advantage”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.12
      The motive defence.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.13
      The IT circumstances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.14
      Acquisition of all capital assets – purchase and liquidation.. . . . . . . 14.15
      Acquisition of part of company’s capital assets. . . . . . . . . . . . . . . . . 14.16
      Capital assets – extraction by dividend in specie. . . . . . . . . . . . . . . . 14.17
      Extraction of capital asset – sale at book value. . . . . . . . . . . . . . . . . 14.18
      Asset held as trading stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.19

CHAPTER 15
Double Taxation Treaties and Charities
   Introduction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1
   Are charities “residents of a contracting state”.. . . . . . . . . . . . . . . . . . 15.2
   Charity as beneficial owner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.3
   Treaty exemptions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.4
   “Subject to tax”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.5
   Dual qualified charity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.6

CHAPTER 16
Cash Gifts From Individual to Charity (Gift Aid)
   Gift aid - Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1
   History of IT reliefs for cash gifts to charity. . . . . . . . . . . . . . . . . . . . 16.2
   Requirements of Gift Aid relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.3
   “Gift”.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.4
   Gift “to a charity”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5
   Payment to charity to pass on to another charity. . . . . . . . . . . . . . . . . 16.6
   Qualifying donation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.7
   Payment of a sum of money (Gift Aid condition A).. . . . . . . . . . . . . . 16.8
   “A sum of money”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.9
   Gift by will. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.10
   Loan to charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.11
   Release of debt owed to individual by charity. . . . . . . . . . . . . . . . . . 16.12
   Charity pays sum to donor: circular payments. . . . . . . . . . . . . . . . . . 16.13
   Volunteers expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.14
   Repayment rule (Gift Aid condition B). . . . . . . . . . . . . . . . . . . . . . . 16.15
   Payroll deduction scheme payment (Gift Aid condition C). . . . . . . . 16.16
   Payment otherwise deductible (Gift Aid condition D). . . . . . . . . . . . 16.17
   Acquisition of property rule (Gift Aid condition E).. . . . . . . . . . . . . 16.18
   Benefit rule (Gift Aid condition F). . . . . . . . . . . . . . . . . . . . . . . . . . . 16.19
   Meaning of “benefit”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.20
   Acknowledgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.21
   Benefit “in consequence” of the gift.. . . . . . . . . . . . . . . . . . . . . . . . . 16.22
viii Contents in Detail

     Contract to provide benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.23
     No contract to provide benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.24
     Gifts from parents to schools. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.25
     Gift to support charity workers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.26
     Adventure fundraising events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.27
     Membership subscriptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.28
     Benefit received by connected or associated person. . . . . . . . . . . . . 16.29
     Split payment or gift with benefit?. . . . . . . . . . . . . . . . . . . . . . . . . . . 16.30
     Small benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.31
     Valuation of benefits.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.32
     Charity auctions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.33
     Planning for benefits of uncertain value . . . . . . . . . . . . . . . . . . . . . . 16.34
     Annualisation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.35
     Right of admission. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.36
     Goods sold by charity as agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.37
     Non-resident donor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.38
     The minimum and maximum amount. . . . . . . . . . . . . . . . . . . . . . . . . 16.39
     Mechanics of Gift Aid relief.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.40
     Donor pays insufficient tax.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.41
     Gift to charity by remittance basis taxpayer. . . . . . . . . . . . . . . . . . . . 16.42
     Position of charity receiving gift from individual.. . . . . . . . . . . . . . . 16.43
     Gift Aid system of relief and alternatives: commentary.. . . . . . . . . . 16.44
     Carry back of donor’s higher rate relief. . . . . . . . . . . . . . . . . . . . . . . 16.45
     SA donate: giving in the tax return. . . . . . . . . . . . . . . . . . . . . . . . . . . 16.46
     Deposited donations (carry forward of relief). . . . . . . . . . . . . . . . . . 16.47
     Gift Aid declaration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.48
     Gift from joint bank account.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.49
     Sponsored events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.50
     Record keeping and evidence of payment. . . . . . . . . . . . . . . . . . . . . 16.51
     Using envelopes to collect cash donations. . . . . . . . . . . . . . . . . . . . . 16.52
     Interaction of Gift Aid and VAT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.53
     Transitional Gift Aid Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.54

CHAPTER 17
Corporate Gift Aid
   Corporate gift aid - Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.1
   Relief for qualifying charitable donations. . . . . . . . . . . . . . . . . . . . . . 17.2
   Carry back and carry forward of relief. . . . . . . . . . . . . . . . . . . . . . . . . 17.3
   Meaning of “qualifying charitable donations”. . . . . . . . . . . . . . . . . . . 17.4
   Qualifying payment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.5
   Distribution rule: Corporate Gift Aid Condition E.. . . . . . . . . . . . . . . 17.6
   Non-resident company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.7
                                                                                 Contents in Brief          ix

      Claims, certificates and record keeping. . . . . . . . . . . . . . . . . . . . . . . . 17.8
      Position of charity receiving gift from company. . . . . . . . . . . . . . . . . 17.9

CHAPTER 18
Giving by Businesses to Charity
    Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1
    Gift to charity: deductible business expense. . . . . . . . . . . . . . . . . . . . 18.2
    Sponsorship.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.3
    Business expenditure deduction v. Gift Aid relief. . . . . . . . . . . . . . . . 18.4
    Gift Aid from partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.5
    Gift of services to charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.6
    Secondment of employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.7
    Gift of trading stock, plant and machinery. . . . . . . . . . . . . . . . . . . . . . 18.8
    Lease to charity at undervalue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9
    Gift of goods and services: VAT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.10
    Payroll deduction scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.11

CHAPTER 19
  Payroll Giving Scheme
   History .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.1
  Operation of payroll giving scheme. . . . . . . . . . . . . . . . . . . . . . . . . . . 19.2
  The agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.3
  Conditions for relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.4
  Benefit for donors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.5
  Position of recipient charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.6
  Interaction with other income tax reliefs. . . . . . . . . . . . . . . . . . . . . . . 19.7
  Employer’s administrative expenses.. . . . . . . . . . . . . . . . . . . . . . . . . . 19.8
  Comparison with Gift Aid 110. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.9
  Commentary: let’s repeal the payroll giving scheme. . . . . . . . . . . . . 19.10

CHAPTER 20
Interest-free Loans to Charities
    Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1
    IT settlement provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.2
    Transactions associated with loans or credit. . . . . . . . . . . . . . . . . . . . 20.3
    Capital gains tax liability of lender.. . . . . . . . . . . . . . . . . . . . . . . . . . . 20.4
    Inheritance tax position of lender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.5
    Position of charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.6

CHAPTER 21
Relief for Gift of Shares, Land and Works of Art to Charity
    Introduction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1
x Contents in Detail



     The conditions for relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2
     The whole of the beneficial interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 21.3
     Meaning of “qualifying investment”.. . . . . . . . . . . . . . . . . . . . . . . . . . 21.4
     Further provisions for gift of land.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.5
     Anti-avoidance for gift of land: “disqualifying events”. . . . . . . . . . . . 21.6
     Land in joint ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.7
     Amount of relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.8
     Benefits deducted from the relievable amount. . . . . . . . . . . . . . . . . . . 21.9
     Incidental costs of making disposal . . . . . . . . . . . . . . . . . . . . . . . . . . 21.10
     Net benefit to charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.11
     Valuation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.12
     Disposal-related liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.13
     Mechanics of QIDR relief: position of donor.. . . . . . . . . . . . . . . . . . 21.14
     CGT relief for donor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.15
     See : Position of the charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.16
     Gift of investments v. gift of cash of same value. . . . . . . . . . . . . . . . 21.17
     Gift of investments v. sale and gift out of proceeds. . . . . . . . . . . . . . 21.18
     “Sharegift” services for uneconomic shareholdings. . . . . . . . . . . . . . 21.19
     IT relief for gift of non-qualifying assets to charity via QIDR.. . . . . 21.20
     Record keeping. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.21
     Works of art and pre-eminent objects.. . . . . . . . . . . . . . . . . . . . . . . . 21.22
     Commentary: Extension of income tax reliefs to other assets. . . . . . 21.23
     Relief for Charitable Remainder Trusts?. . . . . . . . . . . . . . . . . . . . . . 21.24

CHAPTER 22
Capital Gains Tax Relief on Disposals to Charity
   The CGT background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1
   CGT charity relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.2
   CGT charity relief: position of donor. . . . . . . . . . . . . . . . . . . . . . . . . . 22.3
   Meaning of “consideration”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.4
   CGT charity relief: position of the charity. . . . . . . . . . . . . . . . . . . . . . 22.5
   Disposal of qualifying corporate bond to charity. . . . . . . . . . . . . . . . . 22.6
   Disposal of offshore fund to charity. . . . . . . . . . . . . . . . . . . . . . . . . . . 22.7
   Gift to foreign charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.8
   Planning: selection of assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.9
   Gift followed by sale by charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.10
   Gift of assets v. sale & gift of cash. . . . . . . . . . . . . . . . . . . . . . . . . . . 22.11
   Assets with inherent losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.12
   Disposal from non-charitable trust to charity. . . . . . . . . . . . . . . . . . . 22.13
   Sale to museum, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.14
                                                                                 Contents in Brief         xi



CHAPTER 23
Inheritance Tax Reliefs on Transfers to Charity
    Introduction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.1
    Promise to make transfer to charity. . . . . . . . . . . . . . . . . . . . . . . . . . . 23.2
    Disposition allowable for income tax. . . . . . . . . . . . . . . . . . . . . . . . . . 23.3
    Normal expenditure out of income. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.4
    Brief history of IHT charity exemption. . . . . . . . . . . . . . . . . . . . . . . . 23.5
    The IHT charity exemption.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.6
    “Given” to charities.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.7
    Given to “charities”.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.8
    HMRC practice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.9
    Date for determining charitable status. . . . . . . . . . . . . . . . . . . . . . . . 23.10
    Anti-avoidance provisions: introduction.. . . . . . . . . . . . . . . . . . . . . . 23.11
    Application for charitable purposes rule.. . . . . . . . . . . . . . . . . . . . . . 23.12
    Postponed gift rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.13
    Conditional gift rule .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.14
    How to make a conditional gift to charity. . . . . . . . . . . . . . . . . . . . . 23.15
    Defeasible gift rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.16
    Entire interest rule.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.17
    Limited period rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.18
    Retained interest rule (land). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.19
    Retained interest rule (non-land). . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.20
    Gift to charity with gift over to another charity. . . . . . . . . . . . . . . . . 23.21
    Acquisition of reversionary interest or settlement power from. . . . . 23.22
    IHT exemption on termination of interest in possession. . . . . . . . . . 23.23
    Gift of interest in possession to a charity. . . . . . . . . . . . . . . . . . . . . . 23.24
    Purchase of equitable interest by a charity. . . . . . . . . . . . . . . . . . . . . 23.25
    Meaning of “acquired for consideration”. . . . . . . . . . . . . . . . . . . . . . 23.26
    Acquisition for consideration: transitional rules. . . . . . . . . . . . . . . . 23.27
    Loans and use of property.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.28
    Providing a home for dependant for life, remainder to charity.. . . . . 23.29
    Providing fund for dependant for life, remainder to charity.. . . . . . . 23.30
    Gift with reservation of benefit (“GWR”). . . . . . . . . . . . . . . . . . . . . 23.31
    Charity transfers asset to disappointed beneficiary under moral. . . . 23.32
    IHT charity relief on transfer of value by close company. . . . . . . . . 23.33
    Deferred shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.34
    Inheritance tax on charities and their members. . . . . . . . . . . . . . . . . 23.35
    IHT exemption for gifts to national institutions. . . . . . . . . . . . . . . . . 23.36
    IHT 10% incentive relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.37
xii Contents in Detail

CHAPTER 24
Will Drafting
    Obtaining IT and IHT relief on gifts by Will. . . . . . . . . . . . . . . . . . . . 24.1
    Residue to charity with provision for spouse1 . . . . . . . . . . . . . . . . . . . 24.2
    Residue to charity with provision for relative or dependant.. . . . . . . . 24.3
    Estate including agricultural property or business property. . . . . . . . . 24.4
    Specific gifts of business property. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.5
    Property subject to foreign IHT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.6
    Pecuniary legacy out of part business estate.. . . . . . . . . . . . . . . . . . . . 24.7
    Residuary gift to charity out of part business estate. . . . . . . . . . . . . . . 24.8
    Pecuniary legacy to charity out of part business estates: solution. . . . 24.9
    Pecuniary legacies to avoid fragmentation of business assets. . . . . . 24.10
    Interaction of excluded property rules and charity exemption. . . . . . 24.11
    Cost of administration.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.12

CHAPTER 25
Charitable Gift of Share of Residue: Benham Issues
   The problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.1
   An impermissible form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.2
   Terminology: gross v. net division. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.3
   An express grossing up clause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.4
   Is an express grossing up clause wise?. . . . . . . . . . . . . . . . . . . . . . . . . 25.5
   The common form.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.6
   Analysis of common form.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.7
   Case law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.8
   The Benham approach favours HMRC.. . . . . . . . . . . . . . . . . . . . . . . . 25.9
   What should executors and charities do?. . . . . . . . . . . . . . . . . . . . . . 25.10
   The HMRC view.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.11
   Moral for the Will drafter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.12

CHAPTER 26
Obtaining Income Tax and IHT Reliefs on Gift by Will or IoV
   Obtaining IT and IHT reliefs on gift by IoV.. . . . . . . . . . . . . . . . . . . . 26.1
   Arrangements using Gift Aid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.2
   QIDR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.3
   Obtaining IHT and IT reliefs on gifts by will. . . . . . . . . . . . . . . . . . . . 26.4
   Gift of a non-cash asset to charity by Will. . . . . . . . . . . . . . . . . . . . . . 26.5
   Importance of correct Will drafting. . . . . . . . . . . . . . . . . . . . . . . . . . . 26.6



1   References here to spouse include a civil partner (who for tax purposes is treated the
    same way as a spouse).
                                                                              Contents in Brief          xiii

CHAPTER 27
Variation of Wills
   Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.1
   Meaning of “varied”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.2
   Absolute gift by will to individual: variation in favour of charity. . . . 27.3
   Will Trust to L for life, remainder to charity: variation of life interest
       in favour of charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.4
   Will Trust to L for life, remainder to R (not a charity): variation in
       favour of charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.5
   Variation after death of life tenant: conclusion. . . . . . . . . . . . . . . . . . 27.6
   IoV when gift made to foreign charity. . . . . . . . . . . . . . . . . . . . . . . . . 27.7
   Capital gains tax and IoV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.8

CHAPTER 28
Benefits for Donors
   Scope of chapter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.1
   To gift or not to gift?.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.2
   Sale of asset for periodic payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 28.3
   Sale of asset for instalments of capital. . . . . . . . . . . . . . . . . . . . . . . . . 28.4
   Gift of home subject to right of residence. . . . . . . . . . . . . . . . . . . . . . 28.5
   Provision for relatives and dependants: lifetime IHT planning. . . . . . 28.6

CHAPTER 29
Trusts with Some Charitable Element
   Types of trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.1
   Partly charitable trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.2
   Temporary charitable trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.3
   Mixed charitable trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.4
   Settlor-interested trust.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.5
   Trust income paid to minor children of settlor. . . . . . . . . . . . . . . . . . . 29.6
   CGT planning on sale of trust asset to charity. . . . . . . . . . . . . . . . . . . 29.7

CHAPTER 30
Payments to Charity From Non-Resident Trusts
   Distribution to UK charity from non-resident trust. . . . . . . . . . . . . . . 30.1
   “Capital payment”.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.2
   Is a charitable company a “beneficiary” within s.87?.. . . . . . . . . . . . . 30.3
   Is a charitable trust “a beneficiary” within s.87?. . . . . . . . . . . . . . . . . 30.4
   Does the charity exemption offer a defence to s.87?. . . . . . . . . . . . . . 30.5
   Does a capital payment to charity reduce s.2(2) amounts. . . . . . . . . . 30.6
   Does a capital payment fall within section 731 ITA?.. . . . . . . . . . . . . 30.7
   Payment to foreign charity from non-resident trust. . . . . . . . . . . . . . . 30.8
xiv Contents in Detail



CHAPTER 31
Estates of Deceased Persons - CGT
    Succession law background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.1
    Acquisition by PRs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.2
    Transfer from PRs to beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.3
    CGT planning for PRs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.4
    CGT planning by IoV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.5
    Claims against charities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.6
    Claims under the Inheritance (Provision for Family and .. . . . . . . . . . 31.7
    Claim against charity: Will of disputed validity.. . . . . . . . . . . . . . . . . 31.8
    Claim against estate: proprietary estoppel. . . . . . . . . . . . . . . . . . . . . . 31.9
    CGT allowable loss.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.10

CHAPTER 32
Estates of Deceased Persons: Income Tax
    Introduction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.1
    Pecuniary legacy to charity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.2
    Income from specific legacy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.3
    Income from residuary estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.4
    Absolute/limited/discretionary interest in residue. . . . . . . . . . . . . . . . 32.5
    Payment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.6
    Charge on estate income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.7
    Estate income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.8
    Amount of estate income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.9
    Person liable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.10
    Basic amount of estate income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.11
    Assumed income entitlement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.12
    Charity exemption for estate income. . . . . . . . . . . . . . . . . . . . . . . . . 32.13

CHAPTER 33
Value Added Tax
   Introduction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.1
   Charge to VAT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.2
   Recovery of input VAT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.3
   Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.4
   "Taxable" person.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.5
   Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.6
   Supply in the course or furtherance of a business. . . . . . . . . . . . . . . . 33.7
   Rates of VAT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.8
   VAT Exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.9
   Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.10
                                                                                 Contents in Brief           xv



      Health and welfare. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.11
      Subscriptions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.12
      Sports, competitions and physical education . . . . . . . . . . . . . . . . . . . 33.13
      Fundraising events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.14
      Meaning of "event". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.15
      Meaning of "charity" for fundraising events exemption.. . . . . . . . . . 33.16
      "Primary purpose is the raising of money". . . . . . . . . . . . . . . . . . . . . 33.17
      Exclusion of exemption if more than 15 events. . . . . . . . . . . . . . . . . 33.18
      Exclusion of exemption where accommodation provided. . . . . . . . . 33.19
      Exception for competitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.20
      Extent of exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.21
      Avoiding exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.22
      Interaction with zero-rating provisions. . . . . . . . . . . . . . . . . . . . . . . . 33.23
      Minimum charge and voluntary donation. . . . . . . . . . . . . . . . . . . . . . 33.24
      No charge and a voluntary donation. . . . . . . . . . . . . . . . . . . . . . . . . . 33.25
      VAT on admission charges.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.26
      Advertising. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.27
      Goods used to collect donations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.28

CHAPTER 34
Stamp Duties
   Stamp duty land tax.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.1
   The form of the relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.2
   Eligibility for the relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.3
   The conditions for relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.4
   Withdrawal of relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.5
   Stamp duty reserve tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.6
   Non-charitable subsidiary of charity.. . . . . . . . . . . . . . . . . . . . . . . . . . 34.7

CHAPTER 35
Rating Relief
    History of rates and charity rating reliefs. . . . . . . . . . . . . . . . . . . . . . . 35.1
    Terminology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.2
    "Charity". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.3
    "Used for charitable purposes". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.4
    Mandatory relief .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.5
    Discretionary relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.6
    Rating relief for places of public religious worship. . . . . . . . . . . . . . . 35.7
    Rating relief in Scotland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.8
    Rating relief in Northern Ireland.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.9
xvi Contents in Detail

CHAPTER 36
Community Amateur Sports Clubs
   CASCs - Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.1
   Requirements of a CASC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.2
   Registration of a CASC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.3
   The location condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.4
   The management condition.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.5
   Exemptions for registered CASCs. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.6
   Non-qualifying expenditure rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.7
   Charge on ceasing to be a CASC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.8
   Reliefs for donors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.9
   VAT treatment of CASCs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.10
   Rating relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.11
   Commentary: let's abolish the CASC regime. . . . . . . . . . . . . . . . . . . 36.12

CHAPTER 37
Political Parties
    Political parties - Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.1
    IHT exemption for gifts to political parties. . . . . . . . . . . . . . . . . . . . . 37.2
    CGT Holdover relief on gifts to political parties. . . . . . . . . . . . . . . . . 37.3
    Reorganisation of constituency boundaries. . . . . . . . . . . . . . . . . . . . . 37.4

CHAPTER 38
Housing Associations
   IHT exemption for gifts to housing associations. . . . . . . . . . . . . . . . . 38.1
   Capital gains. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.2
   Income tax reliefs in relation to housing associations. . . . . . . . . . . . . 38.3

CHAPTER 39
Local Authorities
   Local authorities - Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.1
   Definition of local authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.2
   Income tax exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.3
   Corporation tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.4
   Capital gains tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.5
   Inheritance tax.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.6
   SDLT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.7

CHAPTER 40
Administration: Tax Returns and Reclaims
    Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.1
    Form ChA1: HMRC Charities application form. . . . . . . . . . . . . . . . 40.2
                                                                     Contents in Brief          xvii

Form ChV1: HMRC Charities variations form. . . . . . . . . . . . . . . . . 40.3
Form 64-8: Authorising an agent.. . . . . . . . . . . . . . . . . . . . . . . . . . . 40.4
Claims for tax relief.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.5
What tax can charities reclaim?. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.6
Form R68(i): Gift Aid and other tax repayment claims. . . . . . . . . . 40.7
Time limit for making a claim.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.8
Tax reclaims for sponsored events. . . . . . . . . . . . . . . . . . . . . . . . . . 40.9
Gift aid audits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.10
Future developments: online filing and in-year repayments. . . . . . 40.11

				
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