Informal membership groups
I've been approached by someone running a society for book enthusiasts.
The society in question are all fans of a particular author, and the society's aim has always simply been to share their enthusiasm for that author with one another and the world in general. They have a little over 400 members who pay an annual subscription which is solely to cover the costs of producing and distributing the newsletters of the society. If the income does ever exceed the costs then this has been ploughed straight back into the society and no member is entitled to any of the funds except to cover expenses incurred on the group's behalf. They have also ocassionally received bequests, where a deceased member has asked in their will for their book collection to be sold by the society (who are more likely to get a good price due to having a ready market in their members) with the society receiving some of the proceeds. This has always been a case of the share of the proceeds being decided by the deceased rather than the society charging a fee for doing this.
They are now planning to produce a book about the works of the author, and this has raised the question of the taxability of the society. There is no intention at present of this book being a commercial venture, with the book being offered to members with a sales price pitched at a level to cover the costs of production as for the newsletters.
The whole thing has only ever been run on an informal basis but would their activities give them a liability to corporation tax? Is there any way in which the activities of the group could be considered charitable and thus exempt from tax? If not, what is the best approach here? This is not a case of anyone seeking to avoid paying tax, but simply a case that the very possibilty never occurred to them until now. The society has been running for a number of years so there is some concern about penalties arising if they should have been submitting returns historically.
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