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Not for Profit Org - online filing

Hi

Please note I am a book-keeper trying to help and not a devious tax adviser!

A ltd company is a not for profit organisation and they are using online filing for the first time this year. They have been submitting accounts for 5 years and HMRC fully accept they are not a trading company.

Because of how the pages on the joint Companies House / Corp Tax system are set up they could not tick the Charity box (as they are not a registered charity) and so filed as a trading company. They have made a very small profit (well excess income over expenditure) - £10!) but the HMRC automated tax return says they owe tax on it - how do they complete the returns so that Companies House and HMRC know they are not liable for any tax? It was easy with the paper returns as they declared the income and then entered 0 in the Taxable profit section but online they don't sem to be able to do this.

Does anyone else have any experience of this? I saw the posts re the HMRC filing service automatically defaults to 28% tax rate and that all you can do is add a note on the accounts saying you are a small company - I emailed a lovely contributer to this site and he said I should do that also - is this the answer?

Thanks

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09th Feb 2011 14:34

Maybe

I haven't used the joint Companies House / Corp Tax system, but presumably you can enter tax adjustments?  In which case, why not just enter a tax adjustment which reduces the taxable profits to zero?

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By neileg
10th Feb 2011 10:39

No such thing

There's no such thing as a not for profit company in tax legislation or company legislation unless you're a registered charity, an Industrial & Provident Society or a Community Interest Company.

HMRC may accept that your activities are not trading for tax purposes, e.g. mutual trading but that depends on the facts and is not about the status of the company. If the directors have decided that they don't want to make a trading profit and in fact a profit hasn't been made, that's fine. If however there is a trading profit then that would be taxable.

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