Donations by a CIC...

Lucy_M

Hi,
I have been approached by a CIC to clarify their situation with regard to the issue of grants. Can these be classified as an expense? The intention of the CIC is to raise funds through grants and trading to issue grants to small business and sole traders through a social enterprise initiative? As the grants are donations to individuals and not charities they won't be able to be treated as 'gift aid'.

Their current thinking is that, if grants issued cannot be taken into account until after profits have been assessed for CT then they may be better off simply paying invoices on behalf of the beneficiaries. For example they have issued a grant of £500 to a lady making vegan beauty products, in order for her to have the products safety tested for supply to the public under EU regulations. Would it have been more tax efficient to have simply paid the invoices from the testers themselves?Their other idea is to have the beneficiary issue an invoice to the value of the donation.

I appreciate CIC's are a minefield and any discussion would be much appreciated...

Thank you!

Lucy_M

Please? I'm struggling to find any useful information anywhere...

Lucy_M

Feeling very lonely...

Gem7321

Nobody knows the answer

Lucy_M

Or on accounting web, or HMRC or the CIC association... very frustrating!