E1.813A Tainted donations
The anti-avoidance rules described below (the 'tainted donations' rules) have effect in relation to 'relievable charity donations' (see below)1. The intention is to deny otherwise available tax reliefs to the donor, and in some cases recover income tax from them, where they enter into arrangements to obtain a financial advantage in return for their donation.
For the purpose of applying these rules a 'charity' also includes a club registered as a community amateur sports club for the purposes of CTA 2010, ss 658–6712.
For the HMRC guidance, see Charities: detailed guidance notes at Annex viii.
History and transition
The tainted donations rules have effect in relation to charitable donations made on or after 1 April 2011, and replaced the legislation on transactions with substantial donors at B5.851. Although note that the substantial donor rules operated by restricting a donee charity's own tax exemptions rather than the donor's reliefs.
Transactions with donors who were already substantial donors before 1 April 2011 continued to be chargeable under the old rules up to and including 31 March 2013, subject to the transitional rule described at B5.851 for non-tainted transactions.
For transactions on or after 1 April 2013 the tainted donations rules potentially apply in all cases, unless the transaction is entered into in pursuance of a contract made before 1 April 2013. If a pre-1 April 2013 contract is varied on or after that date the substantial donors rules will cease to apply, and the tainted donations rules then come into play3.
It is HMRC's view