Income Tax (Trading and Other Income) Act 2005 section 109

Receipt by donor or connected person of benefit attributable to certain gifts

Section 109 deals with the tax consequences when a trader (or someone connected with the trader) receives a benefit linked to a gift of trading stock or plant and machinery that previously qualified for tax relief.

• Where a trader has made a qualifying gift of trading stock (under section 108) or plant and machinery (under section 63(2) of CAA 2001) to a charity or similar body, any benefit received in return is subject to a tax charge
• The charge applies whether the benefit is received by the trader who made the gift or by a person connected with that trader
• If the trader is still trading when the benefit is received, its value is treated as a trading receipt arising on the date the benefit is received and included in the profit calculation for that period of account
• If the trader has permanently ceased trading before the benefit is received, the value of the benefit is instead treated as a post-cessation receipt under Chapter 18

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