bond dickinson charities team

download report

Transcript bond dickinson charities team

THE FUNDING LANDSCAPE 2014
Everything you wanted to know about trading
subsidiaries (but were afraid to ask)
Samantha Pritchard
Email: [email protected]
Tel : 0191 230 8391
Mark Honeywell
Email: [email protected]
Tel : 0113 290 4461
Thursday 23 October 2014
BOND DICKINSON CHARITIES TEAM
•
Ranked as the leading charity law team in the North by Legal 500 2014
•
Dedicated practitioners specialising in the charity sector
•
Supported in all the other legal areas by the wider Charities grouop
OVERVIEW
• What will we cover?

The rules on trading for charities

Managing the relationship between a charity and its trading
subsidiary
TRADING AND TAX
• What is trading?
• General rules about trading and tax
• Exemptions




Primary purpose trading
Ancillary trading
Beneficiaries
Small trading
SMALL TRADING
• Annual turnover limit
Total
Income
Charity
£20,000
Gross Maximum
permitted
of a sales turnover
£20,000
£200,000
Over £200,000
£5,000
- 25% of Charity’s total
gross income
£50,000 (the maximum
limit)
EXEMPTIONS
• Extra statutory concession for “one-off” fundraising
events

Regularity

Public awareness

Not in competition

Application of profits
CONSEQUENCES OF TRADING
• Risk of loss of charitable status
• Tax liability
• Possible breach of trust and personal liability for trustees
TRADING SUBSIDIARY
• Wholly owned subsidiary of Charity
• Tax efficient fundraising vehicle
• Profits paid to Charity
• Charity receives funds as a donation = tax free
• Need for arm’s length relationship
THE GENERAL RULE
• A Charity’s resources may not be used other than to further
its own charitable purposes
THE GENERAL RULE IN PRACTICE
• Staffing
• Governance, independence and conflicts of interest
• Premises
• Other shared resources
• Use of name and logo
FINANCE OF THE TRADING COMPANY –
WORKING CAPITAL
• Does the Charity have the power to invest?
• Is the investment in the best interests of the Charity?
• Loan agreement or share capital?
• Security/guarantees
DIFFICULT TO SPOT TRADING SITUATIONS
• Sponsorship arrangements
• Commercial participator agreements
• Joint ventures with commercial organisations
SIGNPOSTS
• CC35 Trustees trading and tax : how charities may lawfully
trade
• CC14 Charities and investment matters : a guide for trustees
• CC29 Conflicts of Interest : a guide for charity trustees
QUESTIONS & ANSWERS
CONTACT DETAILS
Samantha Pritchard
Email: [email protected]
Tel : 0191 230 8391
Mark Honeywell
Email: [email protected]
Tel : 0113 290 4461