I have a corporate client who currently undertakes a bit of pro bono work for both charities and non-charities. It is looking to expand the amount of pro bono work it is doing but for commerical reasons, it wants to split this work out into a separate entity (sister company or subsidiary). Considering that there would be no intention for the company to make a profit, could a tax deduction be taken for its expenses which it could subsequently group relieve to its profitable parent company. The idea would be that the parent company would then pay for the losses at a rate of £1 for a £1 to prevent any losses accumulating in the new pro bono company.
23rd Feb 2021
Company set up to undertake Pro Bono work only
Can a company set up to solely undertake pro bono work be considered a trading company?
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Have you considered establishing the company doing pro bono work as a charity? If it's then funded by donations from trading company, they would be allowable and complications of group relief don't arise.
It is a good point and something I thought about myself although my client is hesitant to go down this route largely due to the regulatory issues around running a charity. We have considered setting up a CIC as it might give a bit more sway in attracting more pro bono clients to work with
If there’s no intention of a making a profit it ain’t going to create any tax losses.
This is the impenetrable barrier.
https://www.cafonline.org/giving-as-a-company
May be worth a chat with the above.