Corporation Tax Act 2010 section 502

Transactions with substantial donors

Section 502 provides interpretative rules about payments made by a charitable company to a body outside the United Kingdom.

• When a charitable company makes payments to an overseas body, there are specific requirements it must meet.
• The charitable company bears the burden of proving that overseas payments are applied for charitable purposes.
• If the charitable company cannot demonstrate the payments are used for charitable purposes, those payments must be treated as non-charitable expenditure.
• Classifying payments as non-charitable expenditure may have adverse tax consequences for the charitable company.