The Prevention of Terrorism (Temporary Provisions) Act 1989
(PTA) provides various sanctions to stop terrorism and terrorist
organisations getting financial support. Such support is often
extorted from the donor by an explicit or implicit threat to the
donor's person, family or property. To constitute a criminal act
under the PTA the payer must know he or she is making the payment
to a proscribed organisation.
The PTA makes the giving of any such financial support,
whether or not extorted, a criminal act by the giver. Thus, for
example, a payment for ’protection' extorted by a terrorist
group might qualify as a deduction under ordinary tax principles if
it satisfies the first two bullet points at
BIM43100. But the payment is disallowed
by ICTA88/S577A (1) where it is incurred on or after 11 June 1993.
Some taxpayers attribute cash discrepancies to such payments.
When this contention is made for expenditure incurred on or after
11 June 1993, any omitted sales etc receipts must be brought in and
any claim for relief for the payments must be considered separately
in the light of ICTA88/S577A (1).
Where the payer states that the threat was from a criminal
organisation with no known terrorist affinity (and so the original
rules in ICTA88/S577A (1) do not apply) the payment may fall to be
disallowed as blackmail under ICTA88/S577A (1A) (see
BIM43160 and, particularly,
BIM43175).
