Commentary on Sections Overview Chapter 7: Trade profits: gifts to charities etc Section 108: Receipt of benefits by donor or connected person
422.This section sets out what happens if a company receives a benefit in connection with a gift of trading stock or plant and machinery. It is based on sections 83A and 84 of ICTA and section 55 of FA 2002. The corresponding rule for income tax is in section 109 of ITTOIA.
423.Subsection (1) applies the section if a benefit is received by the company or a connected person. Section 82 of this Act (contributions to local enterprise organisations or urban regeneration companies) uses the same approach. The benefit must be in connection with a gift for which relief has been given under section 105, section 107 or the corresponding capital allowances rule.
424.Subsection (2) extends the recovery charge to a benefit attributable to the costs associated with making a gift of medical supplies and equipment.
425.If the donor is still carrying on the trade when the benefit is received the value of the benefit is treated as a trading receipt.
426.If the donor has ceased to carry on the trade when the benefit is received the value of the benefit is treated as a post-cessation receipt. This treatment replaces the general charge under Schedule D Case VI. See Change 19 in Annex 1.