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Tax-efficient structures for community groups in a joint trading activity
We have been involved in joint venture arrangements between community groups and investors/developers. This is typically in the context of developing a wind turbine with profits shared between the developer and the community.
Most often the community group – which has charitable status – will form a subsidiary trading company as a partner in a limited liability partnership (LLP) with the investor/developer.
There may be other investors in the LLP which operates as the joint venture vehicle undertaking the development of the wind turbine. The advantage is that partners receive their profit shares without tax being deducted but are taxed subject to their own circumstances. The trading subsidiary can pay its share of the untaxed profit to its charity owner by way of gift aid therefore without any tax leakage.
We are coming across situations where the investor/developer wishes to invest both in a...
