Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

International Exchange of Information Manual

Charities: Debt or equity interests in a company

IEIM404760: Charities: Debt or Equity Interest in a Company

 

Some charities are set up as companies, for these entities the debt and equity interests are different from those of trusts and similar structures. In this context companies includes all types of bodies corporate, including companies incorporated under Royal Charter, charitable incorporated organisations (CIOs) and Scottish charitable incorporated organisations.  The debt and equity interests are defined for the purposes of the AEOI agreements as follows.

 

Equity Interest

An equity interest in a company is held by all shareholders, and all other persons with an interest in the profits or capital of the company. This includes shares held by way of a program-related or social investment. HMRC do not consider that the members of a company limited by guarantee, charitable company incorporated under Royal Charter or CIO hold an equity interest in the company.

For charities set up as companies, the recipients of charitable grants will not be equity interest holders unless they have an interest in the profits or capital of the company, as indicated above.  Unlike trusts and foundations, the mere receipt of a grant will not make a grantee an equity interest holder.

 

Debt Interests

Debt interests include all loans made to charitable companies and other forms of indebtedness, including formal and informal arrangements, and whether or not any interest is attached to the debt. Debts owed by a charity to trade creditors that do not relate to the lending of money are not included.

 

Once a charity has identified its debt and equity interest holders it will have to carry out due diligence on them to identify whether any of them are Reportable Persons [see IEIM404800].