Chapter IEIM404750

Published date25 April 2016
Record NumberIEIM404750
IEIM404750: Charities: Financial Account: Debt or Equity Interest in a Trust

Many charities are set up as trusts or similar legal arrangements, legal arrangements covers arrangements other than trusts that are not companies or partnerships and includes unincorporated associations and other arrangements. The Financial Accounts and Account Holders are similar for all these structures. For charities set up as companies, see IEIM404760.

A charitable trust will be a trust for the purposes of the CRS, regardless of whether its trustees have incorporated as a body (e.g. under section 251 Charities Act 2011) or one or more corporate bodies have been appointed as its trustees.

A charitable company or charitable incorporated organisation that holds property in trust (e.g. as permanent endowment) separately from its corporate assets may therefore have a reporting obligation in respect of the assets held in trust that is separate from its reporting obligation in respect of its corporate assets.

Equity Interest

An equity interest in a trust or similar arrangement is held by any person treated as a settlor or beneficiary of all or part of a trust, or by any natural person exercising ultimate effective control over the trust. A person is treated as a beneficiary if they have the right to receive, directly or indirectly, a mandatory distribution; or they receive, directly or indirectly, a discretionary distribution from the trust. In the case of discretionary distributions the beneficiary will only be treated as a beneficiary in the calendar year in which they receive a distribution.

For most charitable trusts their beneficiaries will be the individuals and entities to which they make grants or other distributions. The purpose of the grant is not relevant, it is the fact of receiving a grant that makes the person a beneficiary. Most grants will be paid over a finite period of time and at the trustees’ discretion, so the grantee will only be treated as beneficiary in those years they receive a grant and there will be no ongoing obligation to treat the grantee as a beneficiary in subsequent years.

A charitable company or charitable incorporated...

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