Charitable donations

[Milbo]

A company has made charitable donations for a number of years but did not have the funds to pay the donations in 2020. It was agreed and minuted, that the donations would be made by an associated company with the amount treated as an intercompany loan. Relief was claimed by the company who owe the debt.

We argued that the donations were paid by way of a loan and have effectively been made by the claimant company however HMRC have completely ignored our argument and issued a 'view of the matter' letter disallowing the relief. Transactions of this type are commonplace but does the fact that it was a charitable donation make a difference?

Many thanks,

Mark

[wamstax]

One small point - why was the associated company loan not advanced to the company and then the normal charitable contribution not paid by the "normal" company.

[billypiper]

The associated company did not make the donation.


It lent the money to the other company to do it.

It is allowable

Dennis
Taxesclear Ltd

07802704840

[wamstax]

@ Dennis
That’s not what the OP statement said and depends exactly what HMRC was advised in correspondence.

[Milbo]

Thanks both for replying.

The "normal company" bank account was substantially overdrawn at the time of the donation so the payment was made on its behalf by the associated company.