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Trust Tax or Corporation Tax - I'm not sure!

Trust Tax or Corporation Tax - I'm not sure!

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Hi,  I look after a number of Residential Management Companies and am used to not having to prepare a tax return for them as long as the bank interest earned is less than a certain amount.

However, one of these companies received £4,000 during the year from a filming company who used their building in a film. The issue that I have is I don't know whether I should be preparing a Corporation Tax Computation or a Trust Tax Return. Ordinarily we prepare dormant accounts for the limited company. This exists simply to hold the Freehold but it does not trade. We then prepare Residential Management Company Accounts which collects the services charges and pays for the common expenses etc. 

Where should I record the income (i.e. to whom does the £4,000 belong to and what type of tax return should be prepared. Help please.

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By lisler
25th Jul 2013 22:20

I would say the income is liable to Corporation tax in the hands

of the company. The trust aspect is in respect of the residents management company collecting service charges from the members in order to pay for the costs of maintaining their estate. According to my understanding of the latest advisory notes from ACA and ARMA any monies collected from the members is in trust for them.         This would not apply to any income received from third parties. If the income were to be distributed to members then I would be inclined to treat it as a dividend with the associated tax credit.   See HMRC PIM1070, convoluted as usual. 

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Replying to SteLacca:
By AndrewMcGain
25th Jul 2013 22:51

Many thanks for your comments, I'll have a read of HMRC PIM1070 and hopefully come to the same conclusion. Cheers

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