I have a client who operates a workshop within a company limited by guarantee. They act as not for profit and never take any further funds out of the company, it's all invested back into the club. It's essentially a club set up so that members can indulge in craft and design hobbies (i.e. not business).
After reading the HMRC manuals on Mutual Trading, I believe they meet the pre-req requirements for not having their membership and donation income taxable under CT, though they may need to slightly tweak their Articles of Association to reflect this as they are the standard model LTD by Guarantee ones.
However do I need to apply for clearance from HMRC to use the principles and if so how do I go about doing that? Is there a useful template letter that someone could provide?
Alternatively do I simply just prepare the CT600 and not report any non-investment income but provide notes within the comp explaining why I have done so?
Thanks!
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De facto
Should be de facto but it wouldn't harm to get HMRC to agree. It may well be that they don't require a CT600 from you.
However, I take it that there's absolutely no income at all with people outside the company - am I correct in that ?
Once again we have this expression "not for profit". The company either makes a profit or it does not. Its intentions are not relevant.