Clause 54 - Gifts of medical supplies and equipment
Finance Bill
9:45 am
Mr Howard Flight (Arundel and South Downs, Conservative)
The clause offers tax incentives to companies for gifts made from trading stock of medical supplies or equipment for human use and humanitarian purposes. There are two incentives: first, the value of the gift is not included in the company's tax computations, so the company will get a full tax deduction for the cost of acquiring the stock without having to show any corresponding income. Secondly, any costs of transportation, delivery or distribution incurred by the company will also be tax deductible. If the company or a person connected to the company receives a benefit from the gift, the company is taxed on the value of that benefit. The Treasury has given
power to determine which supplies and equipment the incentives do not apply to. The tax reliefs apply to gifts made on or after the beginning of the tax year.
We have three objections, which is why we introduced the new clause. First, the incentives would apply to companies alone, not to unincorporated businesses. Although there may not be many such unincorporated businesses, why should they not be covered in the event that they have something to contribute?
Secondly, War on Want has raised concerns that the measures could be used for drug dumping—making gifts of drugs that may be good products but are not especially useful in over-supply.
Thirdly, the measures apply to medical supplies or equipment given for humanitarian purposes, but there is no definition as to what constitutes medical supplies or equipment or, indeed, humanitarian purposes. Under corporation tax self-assessment, companies are required to assess their tax liabilities to the best of their knowledge. Would it not be helpful, therefore, to provide guidance as to what will constitute qualifying gifts? As drafted, the clause provides help only for humanitarian purposes and does not give incentives for gifts of supplies and equipment that may help emergency recovery in event of disasters.