Articles

The pandemic has made many charities reconsider their ways of working. Are existing models the best ways of delivering for beneficiaries who are there better more impactful models? One strategy being explored by many is to consider the various models of collaborative working. This is the topic for our free webinar on 29 April.

Working collaboratively with other organisations can have a number of benefits, including opening up new funding opportunities and enhancing the delivery to beneficiaries by providing a more joined up and higher quality service. There is also the opportunity to save costs by sharing back office services.

While there are potential benefits, there are also many considerations to setting up such an arrangement, including how the collaborative working arrangement is structured. Common examples in the charity sector include:

• Consortium bids – the most common structure for consortium bids is for one organisation to be designated as the lead partner, which holds the formal agreement with the funder. The other partners are then funded through subagreements/contracts with the lead partner. 

• Joint Activity – two or more organisations agree to work together to deliver an activity. Usually there will be a formal agreement setting out the nature of the arrangement including any financial arrangements. 

• Joint Venture – a formal separate company set up to undertake an activity. Collaborating organisations are usually the members of the new organisation, and buy and sell services though the joint venture company. 

• Sharing back office functions – for example, premises, facilities, HR, IT and finance. 

Each of these different models has its considerations for tax that need to be considered, and in particular the desire to minimise any irrecoverable VAT that may arise. In this seminar we will look at the key tax considerations for each and discuss the implications and potential mitigating actions that can be put into place.

Our free webinar “Collaborative working made simple”, taking place on 29 April 2022, is available to book via our website. If you are unable to attend, you can request a recording of this webinar via [email protected]

By Ross Palmer, Senior Tax Manager