Advice on trading subsidiaries using a charity's premises
Howard Lake | 1 March 2004 | News
Charities will continue to need to use trading subsidiaries for the indefinite future as the government has turned down proposals to allow charities to trade, according to solicitors Russell Cooke.
In their latest e-mail newsletter to clients, charity law specialists Russell Cooke report advise on how charities’ trading subsidiaries might share a charity’s premises.
“Initially a trading subsidiary may occupy a relatively small part of a charity’s premises and it may be appropriate to use a licence to document the shared use”, advises James Sinclair Taylor at Russell Cooke. “Even then, a full market level fee must be charged. This applies even if the charity is not paying any rent itself.”
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As the trading subsidiary grows, they advise that it should be granted a lease at full market rent. However, such leases must be granted with the Charity Commission’s consent and be approved by the charity’s trustees.
There are also VAT implications when letting to a business: Russell Cooke warn that “where the use is substantial it may put the charity’s exemption from business rates at risk.”
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.