Advice on trading subsidiaries
Charities are not always exempt from tax and some of their activities may be regarded as trading which will potentially mean they have to pay tax on any profits. If this is the case it is sometimes worth considering setting up a training subsidiary.
Training subsidiaries can also be used if a charity is embarking on a riskier activity and does not want to risk the assets and reserves of the charity.
Ensuring a training subsidiary is set up properly is critical because, if it is not done correctly, it can lead to issues with the charities commission and potentially large tax bills.
Bevan & Buckland have many years’ experience advising on setting up trading subsidiaries for charities to ensure that tax is minimised and the trustees comply with their duty to protect the charities assets.