Local Authority Trading Companies (LATCo’s) – Where to start?

LATCo’s are one of the emerging corporate issues of our time. Whilst they are not new, in fact some have been around for a very long time, they are currently enjoying a renaissance period as Local Authorities (perhaps driven by tough financial constraints) search for innovation in service delivery or for alternative income streams.

For any Local Authority contemplating the creation of a LATCo it is important to take on board the experiences of others who have gone before. One of the most interesting developments of recent time has been the emergence of the LATCo Network which aims to provide a forum for discussions and the sharing of experiences in the sector. Click here to visit the LATCo Network website.

As a firm Ensors have worked with a significant number of LATCo’s and Local Authorities right across England and experience shows that being involved as early as possible in the discussions around the potential creation of a LATCo can provide significant benefits to the new organisation.

For any potential LATCo, the first decision is how should the new organisation be structured.

Under UK Law there are a myriad of potential structures including:

• A company limited by shares

• A company limited by guarantee

• A limited liability partnership

• An incorporated charity

• An unincorporated charity

• A Community Interest Company (CIC)

• A Community Benefit Co-operative

• An Employee Benefit Co-operative

In fact, there are so many different options that the choice can appear bewildering. However, the choice of structure is key to the success of the organisation going forwards as there are a number of important differences in terms of taxation and other regulatory matters.  Therefore, due consideration should be given to this and, ideally, expert advice taken.

It is well worth investing in external professional advice both in terms of accounting/taxation and legal advice as the potential savings can be considerable.  I have seen a number of LATCo’s that were, in hindsight, set up with insufficient consideration being given to the most appropriate structure.   As a result, significant amounts of tax and VAT leaked from the organisations and the only way to stop this was to re-structure.  This being a much more disruptive and expensive process than getting the structure right to start with.

To support the formation and success of LATCo’s, we are happy to provide a free-of-charge initial meeting.  To find out more please contact one of the Ensors LATCo team Barry Gostling, Helen Rumsey or Zoe McLaughlin.