Is a Lottery Community Fund taxable

Lottery Funding and Tax

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The CIC I help with has a National lottery Communities Fund running from October 23 - October 24. The CIC has to submit a accounts to the HMRC for year ending 31st april 24. Is the fund taxable and if not how to I show it on the annual accounts. Some of it is designated for activities which have not yet taken place. If I show it as income, will it be taxed.

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By Tax Dragon
04th May 2024 13:11

What is it if it's not income?

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By Dougscott
04th May 2024 16:43

Presumably the income is to be spent on specific community activities and there will be no surplus at the end of the project as income will equal expenditure. You should therefore defer unutilised income to the next accounting period so that in the current accounting period income equals expenditure, ergo no surplus and no corporation tax.

But it sounds like you could do with an accountant.....

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Replying to Dougscott:
By Paul Crowley
04th May 2024 21:11

A basic accounting principle is matching.

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By jonharris999
05th May 2024 06:06

I appreciate that it may be frustrating for members of the public with accounting issues when accountants feel the best answer that they can give to questions posed here is "you need an accountant". But sorry - you need an accountant.

It is an unintended and unwelcome consequence of the self-assessment, file online system for the self-employed that it leads some people into thinking that DIY for company accounts is a similar sort of exercise. It isn't. If self-assessment for the self-employed is Level 1, then company accounts are Level 3, a company tax return is Level 6, a CIC is Level 8, and accruals, deferred income and some of the other issues you are trying to tackle here are Level 10 (and R&D or Creative Reliefs, which you didn't ask about on here but some people do, are Level 15). It's like walking into a pharmacy and asking for help with some neurosurgery you are trying to knock out at home after Newsnight.

Somewhere in the company formation process at CH there ought to be a big red flashing warning sign that says "You're 99% likely to need an accountant so don't think you won't".

Sorry, stj - I do appreciate that this isn't the type of answer you were looking for.

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