20 October 2014 
Amanda Darley, Head of Operations and Engagement
The ICAEW is currently considering some legal advice recently received in relation to Gift Aid payments from charity subsidiary companies to the parent charity. Currently, the level of profits for corporation tax purposes sometimes exceeds the cumulative reserves (which are made up of retained accounting profits) and the subsidiary company can still make a Gift Aid payment out of subscribed share capital, providing the objects of the company authorise such gifts and doing so would not make the company insolvent. This is the current position of the Charity Commission in the current version of its guidance (CC35 para D5).
However, it appears that this position may not be correct under company law and we are expecting ICAEW to issue new guidance on this in the light of recent legal opinion. We are currently investigating this further to find out when the guidance might be issued (we do not believe it to be imminent, although some HEIs are already having questions from their auditors about this). If the position on timing of the new guidance changes, we will notify members immediately.
Harriet Latham, from the Open University, has produced a helpful guide to this issue, including suggestions on how to deal with it.
