Charities and Trading: Law, Accounting and Tax Issues

by Pesh Framjee Charities Advisory Trust, 1996
Pub: Butterworth Heinemann/CIM. 1996 £9.95 ISBN 0 9512940 1 6

Many arts organisations are involved in trading as part of their charitable activities, and in trading to raise funds to support this activity. It is vital to be clear about which activities ought to be carried out by the charity and which by a trading subsidiary. The question of whether and when it is necessary or desirable to set up a subsidiary company are fraught with problems due to the interaction of the requirements of the Charity Commissioners, the Inland Revenue and Customs and Excise.

Pesh Framjee's clear, short guide manages to incorporate and explain Inland Revenue, Charity Commissioners and VAT guidance notes and to address all the important areas

  • what constitutes charitable trading and what does not and the implications for tax, VAT, charitable status, covering theatre productions, hall lettings, sponsorship, donations, catering, sales of merchandise etc.
  • exceptions for tax, exemptions for VAT which highlights the times when a charity would be better off not using the subsidiary - some types of sponsorship, one-off fund-raising events etc.,
  • relations between the charity and subsidiary, arms length transactions, funding and profit shedding (up-dated for changes in covenants) and the implications for tax, VAT, final accounts,
  • the risks involved for the directors of the trading company and trustees of the charity.

It should be read by all charitable arts managers to clarify their organisation's trading situation and to establish whether professional advice (which it does not attempt to replace) is needed.

Review by Maureen McCulloch, Financial Trainer and Consultant
Issue 39, 22 November 1999

SAM's Books compiles the Bookshop section of Arts Professional magazine, and used to compile Bookshop in its predecessor, Arts Business.

This review has appeared in Arts Professional or Arts Business. It gives a longer and more personal description of the book than appears in the booklists.