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In this Guide we look at the main ways a charity can trade and what charity trustees need to consider in terms of the charity test and charity trustee duties as set out in the Charities and Trustee Investment (Scotland) Act 2005 (the 2005 Act).
This Guide is split into three sections:
1.1 What is trading?
1.2 Primary purpose trading
1.3 Ancillary trading
1.4 Non-primary purpose trading
1.5 What doesn’t count as trading?
1.6 Tax exemptions and reliefs
2.1 What is a trading subsidiary?
2.2 When should a charity set up a trading subsidiary?
2.3 What do you need think about?
2.4 Setting up a trading subsidiary
2.5 Managing the relationship between the charity and trading subsidiary
3.1 Does trading advance the charity’s purposes and provide public benefit?
3.2 Does the charity’s governing document allow the activity?
3.3 Is trading in the interests of the charity?
3.4 Are the charity trustees acting with care and diligence?
This isn’t a comprehensive Guide to all the areas to consider with trading or with tax. We recommend that you take appropriate advice before starting any trading activity: see sources of help and advice below.
This Guide is aimed at charity trustees, and people working with trustees. It will also be useful to those applying to become a charity which intends to carry out trading.
The glossary provides you with further information, definitions and descriptions of some key terms. We have highlighted these key terms in bold purple type. Clicking on these terms will take you straight to the glossary or the relevant section of guidance. The Guide also contains many links to external websites for other sources of information.
The Guide is split into sections to help you find the information most relevant to you and your charity. As trading can be a complex area we suggest that you read the Guide in full at first to get a better understanding of the implications for your charity.
OSCR publishes general guidance for charities, but we can’t provide specific advice on the full range of things which can happen in or affect your charity. These organisations can help with some or all of the areas set out in this Guide and more: