We have just taken on a new client (incorporated chairty). The previous accountant has not claimed the employer NIC allowance on the basis there is another company under which the employer allowance is claimed.
The employer NIC allowance is only available to one company if the companies are under common control. However, as one is a charity has numerous trustees and obviosuly no share capital and therefore I would imagine there is no common control meaning the employer NIC allowance can be claimed.
It isn't something we come across everyday and HMRC manuals don't really cover this situation so I was wondering if anyone was able to shed some light on the matter.
Thanks
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I used to work for a charity that had a trading company which clearly was under common control as the charity owned the company shares. However assuming that this is not the case in your scenario and there really is no actual real or perceived "control" going on and everything is above board then I would have thought there is no connection.
A normal charity-trading company relationship where the trading company donates its profits to the charity is definitely connected, even if the boards of the company and the charity are different.
That is also my understanding
Otherwise just so easy for charities to have numerous trading things
A new trading thing once there is ERNIC continues ad take the pisseum
https://www.gov.uk/government/publications/employment-allowance-more-det...
.. provides sufficient guidance.
The trading company is likely to be wholly owned by its parent company and thus under its control. The trustees control the charity regardless of shareholding and the charity controls the trading company regardless of common trustees / directors between charity and subsidiary.
I would check the company registers for both as well as the PSC register. Prima facie they would be connected; otherwise presumably there would be no interest of one with the other - but which seems to be demonstrably shown.
Hope this may help.
Remember that the charity (if it’s a company limited by guarantee) is not only controlled by its trustees but also by its members, who may or may not be the same as the trustees.
It doesn't matter if they are connected, by virtue of being under common control. If there are just two companies and one is a charity and one isn't, neither NICA 2014, s 3(1) or s 3(2) applies, meaning that both can claim the employment allowance. Do you see what I did there?
See your logic, gov.uk says different:-
https://www.gov.uk/government/publications/employment-allowance-more-det...
"If a charity controls a trading business, they are also considered connected for the purposes of the Employment Allowance."
Struggling to disagree with you.
They are considered connected, but it's an irrelevance if there's only the two of them. They both get the employment allowance. The guidance isn't incorrect, it's just (deliberately) misleading.
The point though is that if there is a charity with two (or more) subsidiaries, the subsidiaries are also connected and there is only one employment allowance to share between them. The charity also gets its own employment allowance.