Company Limited by Guarantee

Company Limited by Guarantee

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Hi all,

I need some help with an issue. I have a potential donation of £250,000 pounds from a will to be made to a Company Limited By Guarantee (which is not a registered charity and cannot register as a charity). The company (Company A) has a turnover of approx £70,000 per annum made from providing services in he metal health sector such as providing patients and ex-patients to deliver lectures about their experiences and providing patient expertise in the review of mental health services both locally in the East Midlands, and occasionally on a national basis.

Someone wants to make a donation via their will but does not want the donation to be classed as income and therefore be liable to Capital Gains Tax. Instead the person wants the donation to be classed as a capital payment (not classed as income, but classed as an injection of capital).

Given that there are no owners of the company, is this possible? In a Company Limited by Share Capital, this sort of donation would be easy to administer, as the donation would nt be classed as income, and therefore not taxable. Surely it must be possible for a not for profit Company Limited by Guarantee to receive a large donation without it being taxed. There is a difference in terms of the income generated (by providing services in return for payment) and this potential donation (which is an amount of money received with no consideration given in return).

Anyone who can give me a concrete answer to this will officially be designated "Person of the Year" in my annual awards ceremony. The prize winner will receive a Mars Bar, which I will eat on their behalf, :).

Seriously though, any help would be greatly appreciated.

Kind regards,

David Gow.

Replies (3)

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the sea otter
By memyself-eye
27th Sep 2013 09:16

Not for profit

Is a misnomer - not for personal profit would be more apt - but the company is in other respects no different to any other. The 'gift' would have been better arranged through a charity working in the same area which could then have commissioned company 'A' to perform the services in return for payment from the charity - however that avenue is no longer available. Are there or will there be additional costs available to reduce the CT bill or can some of the income be deferred?

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By girlofwight
27th Sep 2013 09:48

Thoughts
1 - create a charity in parallel to support he business, channel donation there?

2 - convert to CIC - or even conventional limited - and take in as share capital/share premium

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By gcolbourn
09th May 2019 16:29

Hi, I'm setting up a non-profit organisation and want to donate a building I own to it without incurring a tax bill for the organisation. I was thinking a Company Limited by Guarantee was the way to go down to it being suitable for a non-profit*. It seems unfortunate if a Company Limited by Share Capital is better for avoiding tax on gifts/donations as it then has the for-profit status which we don't want (i.e. ideally we don't want the possibility of any future directors profiting from the company. All surplus should be plowed back in).

*Note we have also applied for charitable status, but this is complicated by the fact that not all of our activities are regarded as charitable purposes under law, so it's looking like we'll need a company in addition to the charity.

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