So can a not-for-profit register as a charity with HMRC even if they are not a charity with the Charities Commission?
Yes, so long as the organisation can justify to HMRC why they're not registered with the relevant charity regulator. The most simple reason is if its annual income is below the registration threshold (currently £5000). Or they could be 'excepted' or 'exempt'.
-- Edited by KTC on Tuesday 2nd of August 2011 01:29:04 PM
Charities are generally exempt from paying corporation tax, but they are required to complete and submit corporation tax returns in two specific circumstances:
"Charities are generally exempt from paying corporation tax, but they are required to complete and submit corporation tax returns in two specific circumstances: "
So can a not-for-profit register as a charity with HMRC even if they are not a charity with the Charities Commission?
Yes, so long as the organisation can justify to HMRC why they're not registered with the relevant charity regulator. The most simple reason is if its annual income is below the registration threshold (currently £5000). Or they could be 'excepted' or 'exempt'.
-- Edited by KTC on Tuesday 2nd of August 2011 01:29:04 PM
Hi Clayton
This is a real grey area, best to seek guidance form HMRC, as there are many organsations with a mission to be not for profit but do not fit the criteria set by HMRC.
You tend to have to register with HMRC to get tax relief. I know registered charities and Community Amateur Sports Clubs (though not necessarily registered as charity, they are registered with HMRC) can claim tax relief on profits.
I find that - how the accounts are presented, tends to flag up if the donations is taxable or not. If the donations are treated as Income - they are taxable, but if they are treated as "donations" which are to be spent on legitimate expenses (now or in the future), then they are not. A non-profit organisation is not susposed to make money, and has to be careful if it builds up reserves.
A non-profit organisation will normally have "rules" about what happens to any money received. If (like organisation I know), it goes into the pocket of the person running it - then its taxable. But if there are rules, which are followed covering every eventuality which means any money received goes to the "benefit" of say people in need, or a local area - or if wound up the money would go to a simular "non-profit" organisation then again it would not be taxable.
One thing I will mention - donations should not have any strings attached. If they have then again depending on the conditions depends on if its taxable or not.