Annex 1: Minor Changes in the Law Change 29: Trading income: gifts of medical supplies and equipment: section 107
This change makes clear that the reliefs for gifts out of trading stock of medical supplies apply only for corporation tax purposes.
In FA 2002:
	section 55 applies only to companies;
	the deduction for expenses in subsection (3) applies only for corporation tax purposes;
	subsections (3) and (4) refer to an “accounting period” of the company (which is a defined term only for corporation tax purposes); and
	the charge to tax under subsection (4) on any benefit attributable to the making of the gift is a charge to corporation tax.
This leaves open the theoretical possibility that the relief for the gift in subsection (2) (but not for the associated costs) is available to a non-UK resident company liable to income tax (because it carries on a trade in the United Kingdom other than through a permanent establishment in the United Kingdom). Any charge (under Schedule D Case VI) on a benefit received by such a company would be charged to corporation tax, even though the company is not otherwise within the charge to that tax.
It would be surprising if Parliament’s intention was that subsection (2), but not subsection (3), should apply for income tax purposes; or that the charge on a benefit should be to a tax to which a company is not already chargeable.
In practice, it is very unlikely that trading stock could belong to a trade that is carried on in the United Kingdom, but not through a permanent establishment.
So section 107 of this Act rewrites section 55 of FA 2002 as providing only corporation tax relief and Schedule 1 to the Act repeals that section.
The change removes the possibility of income tax relief. But there is a minor theoretical benefit to taxpayers because the change also removes the possibility of a corporation tax charge on a company otherwise liable only to income tax.
This change is adverse to some taxpayers in principle. But it is expected to have no practical effect as it is in line with generally accepted practice.