Is CT due on these?

Is CT due on these?

Didn't find your answer?

I have a parent who is resident in a (very) profitable nursing home run by a private (for profit) limited company. The home runs raffles (I think without a licence), asks for donations and receives bequests in order to "fund" an activities schedule for the residents even though activities are included in the prospectus as part of the service offered. Are the receipts liable to corporation tax?

Replies (7)

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By duncanedwards
16th Mar 2015 15:51

Suspect it depends
On the exact circumstances. For example, are funds kept separate from business funds. Are the donations etc sought on behalf of some formal or otherwise residents' association. Is this activity profitable? If all amounts received are expended on activities, there would be no profit to tax.

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By Bisazza_Malta
16th Mar 2015 15:59

VAT too

I suppose whether the activity is profitable not is beside the point. If it counts as earnings then one ought consider the VAT treatment of these payments. If they are not donations but instead payments for a service, then depending on whether or not it counts as elderly care/support it will have different VAT treatment.

Seems possible they're pocketing what should be output tax.

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By The Innkeeper
16th Mar 2015 16:16

Ignore CT

issues to start with but an unregulated raffle is probably a lottery that needs to be regulated and by not doing an offence is committed

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By Anthony123
16th Mar 2015 16:29

lottery

There is an exemption for lotteries run and drawn on the day - hence schools etc will run small lotteries using cloakroom tickets - it is the presold tickets types of lotteries that normally require the formal licence.

I sense you feel it is unacceptable for a profitable business to try and raise further funds in this way. Perhaps the real issue is how they separate out the funds and ensure they are applied for the purposes for which they purport to be raised. This is a general principle of law even before you get onto the law around charities etc.

Have you looked at their statutory accounts or asked if - as suggested above - they run a residents' club or similar which is all kept separate?

 

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By Flustered
16th Mar 2015 16:40

My thanks to both for your thoughts.

There is a "Friends of" that has funded or part funded some of the activities as well as financed some more durable items in, say, the garden for the benefit of all residents, but I am talking of fund raising made by the home, not the "Friends"

I quite see that £100 in by way of raffle income and £100 expended on activities would be tax neutral (for CT) but that does not mean the income should be disregarded even if there is matching expenditure does it?  Also any ideas on bequests? There are also sales of cards & lavender bags etc made by the residents. 

As things stand relatives are being asked to stump up for "activities" in addition to paying exorbitant fees but have no say in how the money is spent and nor is it being accounted for at local level. There is no simple I&E even saying £x received from & £y expended on, although the Friends accounts do show what they had in & what it is spent on. 

As far as the VAT is concerned the turnover is in the millions (there are about 8 homes in the group) and the invoices show neither VAT or a VAT number

Any further thoughts gratefully received!

 

 

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By Flustered
16th Mar 2015 16:52

Re Anthony 123's reply...

The company was until recently a plc with 2 shareholder directors. Profits for the last financial year were in the order of £2 1/2 million before directors remuneration, dividends and director's pension contributions. I have been able to see simple accounts - which is where I obtained these figures from - without forking out for a full set. However, it has now changed hands - the new directors/shareholder buying the shares from the former and it has become "Ltd" not plc, so I am not sure I would be able to gain access to the following set?

The raffle tickets are sold in advance of the "event" as well as on the day, and there are also sales of cards & other little things made by the residents

And yes- you are quite correct I am incensed that we are being asked to pay out even more than the hefty fees. This is not a charitable organisation!

 

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By Bisazza_Malta
16th Mar 2015 17:09

Duedil

As a PLC it should have been getting an audit - while not 100% certain, one hopes that is sufficient for things to be run by the book!

Now as a Ltd, it may still be above the audit threshold.

What does Duedil say about its audit?

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