I have been approached by a prospective client - an association.
I have been requested to prepare accounts for the members AGM. The secretary claims that the accounts need not be filed with companies house or HMRC as it's not registered with anyone.
I am quite confused with regard to the un-registered status of the association as it carry's out commercial activities as well. Therefore I would appreciate if any one can advise on the followings:
1. Is there any threshold to get registered with HMRC or Companies House.
2. The Association activities have generated profit & is it not taxable under any rules.
3. Can the association have assets in their own name if not, can it be held in any of the member's name & still be included in the balance sheet.
4. Is there any documents I should keep in my file with regard to the Association.
5. Any risk involved in dealing with Un-Registered Associations.
Thank you in advance.
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HMRC exemption - Clubs (Corporation tax)
https://www.gov.uk/corporation-tax-trading-and-non-trading
When HMRC will treat clubs and unincorporated organisations as dormant
HMRC may treat your club or unincorporated organisation as dormant for Corporation Tax purposes if it’s active but both the following conditions apply:
your organisation’s annual Corporation Tax liability must not be expected to exceed £100you run your club or organisation exclusively for the benefit of its members
For each year of dormancy your organisation must not have any:
allowable trading losses for which it may want to claim reliefassets it’s likely to dispose of, which would give rise to a chargeable gaininterest or annual payments to pay out from which tax is deductible and payable to HMRC
HMRC will write to you proposing to make your organisation dormant. They won’t send you a ‘Notice to deliver a Company Tax Return’ and they’ll review this at least every 5 years. HMRC may also apply this treatment to your flat management company.
But HMRC won’t treat your organisation as dormant if it’s a:
privately owned club run by the members as a commercial enterprise for personal profithousing association or you’re a registered social landlord (as designated in the Housing Act 1986)trade associationthrift fundholiday clubfriendly societycompany which is a subsidiary of, or is wholly owned by, a charity
File documentation - Clubs
The most important document - the foundation for the Club's existance - should be retained on file : the Club's constitution / rule book.