Tax compliance for charities

By Tolley in association with Speechly Bircham LLP
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The following Trusts and Inheritance Tax guidance note by Tolley in association with Speechly Bircham LLP provides comprehensive and up to date tax information covering:

  • Tax compliance for charities
  • Introduction to tax compliance
  • Type of Tax Return
  • Filing the Tax Return
  • Filing dates
  • Penalties

Introduction to tax compliance

Charities are not exempt from taxation but they do have the benefit of a number of tax exemptions (subject to complex anti-avoidance provisions). Well-run charities usually do not suffer any direct taxation.

A charity must complete and submit Tax Returns in three specific circumstances:

  • if served with a notice requiring it to file a Return
  • if it has taxable income, gains or profits not covered by a relief or tax exemption, for example income generated from trading that is not within the charitable trading exemption (see the Tax treatment of the charity guidance note)
  • if it has used income or gains for non-charitable purposes or non-qualifying investments

The type of Tax Return required depends on the way the charity is set up.

If a charity does not declare how much tax it owes correctly and on time, HMRC may charge a penalty.

Type of Tax Return

A charitable trust is liable to pay income tax under the Self Assessment regime. If required, a charitable trust must fill in a Trust and Estate Tax Return  (form SA900).

Any charity that is not a trust is treated as a company for tax purposes and liable to pay corporation tax. If required, such a charity must complete a Corporation Tax Return (fo

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