One is a football club and the other is a umbrella company. The umbrella company does do sponsorship albeit not big numbers and always provides a payroll service to the club at commercial rates
Ray, thank you for your reply.Which one is the loss making? Are you just an investor/shareholder or are you also involved in the management of both companies?Are there other individuals who are also involved in the management of both the companies?Many thanks
The Football Club is the loss making enterprise. Historically it has losses of £7m reducing down now in current year to £1m. I am a director and Chairman of both companies. I have staff which is common to both also like HR, accounts dept etc
Ray, thank you for your reply.Your original question is "Is there a mechanism where i can offset my losses in the loss making Company to the profitable company"You have stated you have staff that are common to both companies and provide admin support to both companies.I would consider making the staff employees of the loss making company and then have a service level agreement drawn between the two companies for provision of HR, accounts and payroll services. Also a provison for Management service. You could then charge out to the profitable company an agreed charge for these services inclusive of a good margin to ensure that this input eats into the losses slowly but surely and make both companies profitable in due course.You could use one company for procurement of all services/goods and build up a mark up for this service to the profitable company. This should also help in loss reduction.These are some strategies you could employ aand they are legitimate.
I hope this is helpful and answers your question.
If you have any other questions, please ask me before you rate my service – I’ll be happy to respond. Please only rate my answer if it is acceptable.
Thanks for getting back to me. I had considered doing this but the problem i would encounter it would reduce my margins below a industry acceptable level. I personally dont have a problem with this myself but clients and agencies we deal with, will have a problem so its a non starter unfortunately.
I am taking it from your answer that i can't get relief for my losses in the profit making enterprise without forming a group structure which i really didn't want to do
Ray, thank you for your reply..Being outside the group structure you are unable to avail group relief, I'm afraid.I hope my input has been helpful.Many thanks