Charity Commission withdraw Gift Aid guidance for Charities with subsidiary trading companies

Charity Commission withdraw Gift Aid guidance for Charities with subsidiary trading companies

The Charity Commission has recently withdrawn guidance regarding the payment of Gift Aid beyond distributable profits from charity trading arms to the parent charity.

Many UK charities own or operate subsidiary trading companies through which they carry out trading activities, such as the running of shops, for a profit. This subsidiary then donates some or all of its profits to the charity.  As a consequence, the company receives a deduction for corporation tax purposes and can often eliminate its tax liability for the year. 

However, this may result in breaches of company law under the Companies Act 2006.

It is therefore imperative that charities with trading subsidiaries ensure that profits and reserves are correctly recognised and are sufficient before making a donation of any profits to the parent charity.

The Charity Commission will provide further guidance once they have reviewed the process.

In the meantime if you have any queries please contact our Charity specialist, Peter Atkinson on the details below:

Peter Atkinson
email: peter.atkinson@jsllp.co.uk
telephone: 01942 292503

 

< BACK