Is a donation to a private school (run through a limited company) taxable? The donation has been made by a current parent but he continues to pay school fees and gets nothing in return for the donation. The only guidance I can find on the subject is in BIM41810 and I'm struggling to draw a firm conclusion from this.
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Are you sure?
Although companies limited by guarantee are usually used as a charitable vehicle, there's no technical reason why a company limited by shares can't have charitable status. I don't think I've ever come across a school outside the public sector that wasn't a registered charity.
Wrong(ish)
Incorporation as a company limited by shares is not generally a suitable structure for charities as shareholders are usually entitled to dividends and to a share of the net assets of the company on dissolution. In a charity, all the assets are held for charitable purposes and must not be distributed to the members of the company.
Most incorporated charities are therefore constituted as companies limited by guarantee.
- See more at: http://www.charitycommission.gov.uk/detailed-guidance/managing-your-char...
@Chris
I agree 100% but I did once (a long time ago) deal with a charity that was limited by shares and the shares were held by a trust. Messy potentially but nothing went wrong in practice.
in answer to the original question
if it is a not a charity (and I do know of private schools which are not though they are uncommon these days) then the principles in Smart v Lincolnshire Sugar and similar cases apply. Would the money assist the co in continuing to trade - is it meant to be an addition to trading receipts? Or was it wholly unexpected and unsolicited? Was it given with a clear purpose/outgoing on the part of the school in mind?
I think this could be quite a tricky one. How much (if anything) does the parent know of the school's financial position? Why did he make the donation? I'm not suggesting you answer these questions on the forum but they might be relevant to the view you take.