A charity may find it necessary or desirable to set up a company to carry on its trading activities1. There may be non-tax reasons for establishing such trading companies. An example of this is where a number of charities jointly own a company so that its trading profits can be easily distributed to them, or where the charity would commit a breach of trust by carrying on a trading activity itself.
Tax considerations are also important — in practice, a charity is particularly likely to set up a trading company where a tax liability would arise in respect of the charity's trading activities (that is, where the exemptions set out in B5.825 onwards do not apply). Although the trading company is subject to
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