Cash Gifts by a Company

Cash Gifts by a Company

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One of our clients (a company) wishes to make cash gifts to unconnected individuals and organisations. The activity has nothing to do with its business and so cannot be seen as a deductable expense. The individuals and organisations involved have no charitable status, so Gift Aid doesn't apply. It is merely a decision on the part of the directors (who are also the shareholders) to do this as a good will gesture.

Removing allowable expenses and Gift Aid, my opinion is this. As there appears to be nothing in law to prevent the company giving away all of its profits away, any profits so given will be chargeable to corporation tax under the normal rules. So as long as the company discharges its liability to tax, it can give money away as it sees fit.

Is there any other consideration for the directors or company?

Any comments are appreciated.

Thanks

Replies (4)

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ghm
By TaxTeddy
25th Feb 2015 12:44

Track it

It's an odd transaction so you need as much evidence as possible - HMRC might suspect it is going into the director pockets or part of a circular series of transactions.

I would apply a de minimis approach - relaxed about £200, but not so much if it's £20k.

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Portia profile image
By Portia Nina Levin
25th Apr 2015 17:31

(No subject)

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By macaulay147
25th Feb 2015 14:17

Are they really gifts?


You say that these are goodwill gestures. What goodwill have they received for the payment?

 

 

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RLI
By lionofludesch
25th Feb 2015 14:39

More

Oh dear - a lot more detail needed.  Otherwise we're all just going to guess, aren't we ?

Who's getting how much and why ?

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