STRUCTURES IN VOLUNTARY

ORGANISATIONS

Introduction

• Look at the problems of voluntary organisations

• Outline the defining features of a company

• Distinguish between sole-traders, partnerships and companies

INTRODUCTION

• Outline the tax advantages and disadvantages of incorporation for voluntary organisations

• Consider the implications of being a Charity

The problems of Voluntary Organisations

• The lack of a clear and written constitution

• Difficulties with the succession of control

• Financial problems principally to do with fundraising, borrowing and taxation

The problems of Voluntary Organisations

• Problems with Control itself

• Problems with Liability and Insurance.

• Problems with Supervision.

The Defining Features of a company

• Limited Liability

• Transferable shares

• Perpetual Succession

• Assets, rights, liabilities, etc.

The Defining Features of a company

• Capital

• Management

• Written constitution

• Supervision

Comparison of Company and non corporate bodies

• No Separate Legal entity

• Joint and Several Liability

• No Succession

• Assets, rights, liabilities, etc.

Comparison of Company and non corporate bodies

• No Capital Restrictions

• Participative Management

• No Written Constitution Required

• No Statutory Supervision

Taxation factors in favour of Incorporation

– Eligibility for incentive reliefs

– A lower rate of Corporation Tax

– Opportunities for raising finance on favourable terms

– Greater scope for investment in pension schemes

– Opportunity to sell shares in exchange for shares

– Ability to take advantage of tax-favoured share incentive schemes to pay employees

Taxation factors against Incorporation

• Double capital gains tax effect on liquidation of a company

• Drawings

• Losses

Charities

• The relief of poverty

• The advancement of education

• The advancement of religion

• Other purposes beneficial to the Community

Revenue Requirements

– Written constitution suitably modified• Prohibition of employment of directors

• Prohibition of distribution of money for any reason

• Prohibition of modification without Revenue approval

• Undertaking to distribute surplus to a similar organisation

– Names and details of all proposed directors

Revenue Requirements

– Corporation Tax Number– Accounts of Predecessors– Literature and other promotional materials