Companies limited by guarantee

Companies limited by guarantee

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I am involved in a not for profit organisation and was advised to set up as a company limited by guarantee.
In doing so is the company liable for corporation tax in the same way as for a company limited by shares as we do not have charitable status?

Also some of our income will be received from corporate sponsorship and membership fees I have been told this is mutual income and may not be subject to tax - is this correct?

 

Anon

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By martinfoley07
21st Jun 2007 12:40

a company limited by guarantee.....
...........is identical to a company limited by share capital for the purposes of corporation tax assessments.
(otherwise, would not everyone just form a compnay limited by guarantee?).

Income is income, whether mutual or unilateral.

There are extraordinarily widespread myths (urban or otherwise) about "not for profit" organisations.

However, if the constitution and practices of the company are clearly not designed for profit, and specifically prohibit any distributions to members under any circumstances other than refunding monies on winding up, you may be able to persuade your tax office that any de minimis surplus is carried forward for future expenditure wihtout CT being deducted. But it ain't easy. And bank interest etc will be taxable.

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By Chris Smail
21st Jun 2007 13:24

Corporation Tax is not for Companies
but for any body corporate, including member clubs.

Unless you can demonstrate 'Mutual trading' ie you are just buying the beer jointly and not selling it to outsiders, then you are trading with a view to proit and are taxable.

Limited status protects the members and committee, but if you are a sports club then CASC status is problematic.

What is the not for profit company doing, could you also register it as a charity?

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