Local voluntary group is it taxable
A local group has run for the last 51 years a carnival, fete etc. It promotes the local village and any surplus profits are given away to the local school, children groups, parish council etc. We recently formed a ltd company limited by guarantee, to protect the committee. Hmrc have now raised their head and said we should have been taxable for the last 51 years but by concession will not go back!. We will have to complete a corporation tax return next year and obviously what money we give away to schools etc will not be allowable for tax. We produce a programme of events each year and we charge local firms to put an entry in, i suppose we can say it is a donation, but this underwrites the whole day, the cost of the evening event is equal to the programme profit and we give away £1000 in prizes for the floats. No individual benefits from the fund raising it all goes to local schools etc.
I am at the moment gob smacked, so much for the big society. Please someone help me.