Where a company makes a gift, out of trading stock, of medical
supplies or medical equipment, for human use, and for humanitarian
purposes, then the case law rule requiring the open market value of
the gift to be brought in as a trading receipt is disapplied. In
addition, any costs incurred in the transport and distribution of
the donated products will be deductible in the computation of
trading income.
Exceptionally, if the company or any connected person
receives a benefit from the making of the gift, the amount of the
benefit is to be brought into charge as a taxable profit. An
example would be if a UK manufacturer donated products on the
understanding that an overseas affiliate was given preferential
terms for the supply of other goods or services.
