Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

TAX NEWS: Clubs reprieved from CT filing obligations. BY Nichola Ross Martin

by
26th Jun 2006
Save content
Have you found this content useful? Use the button above to save it to your profile.

HMRC has said it will not pursue clubs and other unincorporated organisations brought back into the tax net by the abolition of the starting rate for corporation tax for modest amounts of tax.

The clarification is contained in minutes of the January meeting of the Corporate Tax Operational Consultative Committee (formerly known as the Self Assessment Consultative Committee (CT), just posted on HMRC's website and headed, somewhat cryptically, "Research and development tax credits".

The following points of interest emerged from the meeting:

Regarding clubs and other forms of unincorporated associations with very modest profits brought back into the tax net by the abolition of the starting rate for corporation tax, HMRC explained that they had an administrative practice not to pursue very modest amounts of tax where the amount would be outweighed by the cost of assessment and collection. Therefore it was probable that it would apply to most clubs and associations, so keeping them out of the tax net. HMRC confirmed that all of their operational offices were aware of the administrative practice.

Associated Companies
HMRC reported that a separate meeting had been held with two of the representative bodies to explore the respective points of view. In short, the current definition of associates meant it was extremely difficult for taxpayers to know precisely with whom they were associated. And that in many cases the rules meant that businesses with no economic connection were treated as being associated.

CT Reform
HMRC said that HM Treasury were now in the lead and referred representatives to the PBR 2005 documents. These indicated that the focus of the project had shifted to international issues ' particularly the implications of the EU Treaty litigation. In the short term, it was understood that Leasing Reform would be included in Finance Bill 2006.

NAO Consultation on VFM study of the Corporation Tax Process
NAO introduced and explained the broad aims and purpose of the study. In particular they would be inviting views on:

  • The ease of use of the CT Filing process.
  • Whether the processing of CT Returns had improved in recent years.
  • In what ways the HMRC service to business might be improved particularly actions that would enable customers to comply with their obligations and reduce the costs to business.
  • The electronic CT Online filing service.
  • Whether views of small business were different from those of large business.
  • Whether there were any benefits from closer alignment of the CT and VAT filing processes.
  • Consultation on CT filing dates
    HMRC gave a brief presentation on the purpose of the consultation process and the perceived business benefits from re-aligning corporation tax filing dates.
    Representatives expressed a number of contrary views, namely:

  • the preparation and submission of accounts for Companies House was quite separate both in substance and timing from those submitted to HMRC;
  • the proposals would not in their view be deregulatory;
  • there would be no cost savings to companies;
  • could lead to overload for small practitioners;
  • there might be some awkward issues around insolvency cases.
  • HMRC noted representatives' views and that it was clear that they could not be explored fully within the time allotted for the meeting. It was agreed that HMRC would give thought to visiting a small/medium practitioner to see the accounts preparation processes at first hand; and a number of separate or bi-lateral meetings.

    CT in Practice
    CT 600: the latest versions were now available on the internet and in paper form (via the Order Line). Other changes include:

  • The guide and supplementary pages.
  • CT 600 E for charities.
  • CT 600 J for reporting avoidance schemes.
  • The CT 600I for ring fenced oil and gas profits would be amended in the near future to take account of the changes announced at PBR 2005.
  • HMRC proposed to issue a new form in autumn 2006 to newly incorporated companies around three months after being set up. The aim was to improve customer service and it would set out the HMRC view based upon the available data as to the expected filing and payment dates.

    HMRC said that they also planned to issue a letter in late spring to recently incorporated companies that had not made a CT41G return. The aim again, was to improve the quality of HMRC data so as in turn to improve customer service.

    Next meeting
    Late May or early June 2006.

    Source: Minutes of the CT consultative committee

    Nichola Ross Martin

    Tags:

    Replies (1)

    Please login or register to join the discussion.

    avatar
    By cricketer9
    31st Jul 2006 19:45

    What does "modest" mean
    I deal with the accounts of a Club that is now registered as a Community Amateur Sports Club. The Revenue advised that they would not require form CT 600 after the first return under CASC rules was submitted.This was before the Chancellor eliminated the £10000 exemption.
    I believe that the withdrawal of this releif may bring the Club into a Corporation tax liability. What level of tax has to be reported?

    Thanks (0)