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TaxRobin
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Hi. Im helping to set up a not-for-profit, Non-Government-Organisation. We

Resolved Question:

Hi. I'm helping to set up a not-for-profit, Non-Government-Organisation.
We don't want to be a charity. We won't be collecting money directly from the public.
Do we HAVE to register for tax and/or the Charities Commission?
Are we compelled by law to register with either/both?
What are the consequences for not registering?

Can't get a clear answer from HMRC or Charities Commission on this? (or maybe I'm not asking the question in the right way!).

Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.

If you are not a charity then you do not have to register with the Charities Commission.

It would be advisable to register with HMRC for tax although they may well tell your organisation not to bother as there is little mileage in processing tax returns which yield no revenue. I would advise you to consult the local tax office, a letter of explanation with a request for guidance will suffice. If any tax is due, of course, you must register and failure so to do can attract penalties.

I do hope In have helped you resolve your problems. Please note that in an hours time I will be moving locations and off line until about midday Friday.
Customer: replied 2 years ago.

Hi. Thanks. But I'm seeking a clearer answer to my question 'are we compelled by law to register?'.


 


So what I'm after is to be pointed in the direction of the law that says you 'have' to register an NGO for tax. I ask this because I can't find the law that says you do!


 


I am asking this question also because I don't quite understand how a not-for-profit NGO is ever going to be in a position to pay tax on its 'profits' since there are never going to be any profits (any surplus is simply ploughed back into the organisation).


 


Many thanks!

Customer: replied 2 years ago.
Relist: Answer quality.
Expert:  TaxRobin replied 2 years ago.
Hello,
Your organization will need to register, even if there are no profits. An organisation can be a charity, club, association, society or other unincorporated body that may be subject to Corporation Tax deadlines and requirements.
If your organization has a very small tax debt or none at all then HMRC would treat as dormant for Corporation Tax purposes.
You stated you could not find the requirement to register. If you look at HMRC CTM41020 you will find that Non-Departmental Public Bodies (NDPBs), variously called Non-Government Organisations (NGOs) are not Government Departments and do not enjoy Crown exemption.
They are seen as companies. ICTA88/S6 states that Corporation Tax shall be charged on the profits of companies. It also states that profits means income and chargeable gains.
It is not that your organization would have to pay tax but it does need to register with HRMC to receive a favorable treatment as a small company.
Customer: replied 2 years ago.

Hi. Thanks for this. Can I just take this to the logical conclusion with two final clarifications.


 


a) Is it true that registering a 'company' (albeit an NGO) is not compulsory but voluntary, under Statue Law (which I've been told only applies if you contract into it)?


I ask this because I've been told that there are many NGO's out there who have not registered because they have not 'contracted in'.


Do you have a view on this?


 


b) The penalty - is this just a fine? Any ideas as to how much?


 


I have no intention of breaking the law - just want to know where we stand - and to question everything!!


 


Many thanks.


 


 


 

Expert:  TaxRobin replied 2 years ago.
Registering is not voluntary. Any penalties for not registering would be based on taxes due.
HMRC will not charge a penalty for a failure to notify if:
• you have a reasonable excuse for the failure, and
• the failure was not deliberate, and
• you notify them without unreasonable delay after your reasonable excuse ended

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Experience: International tax
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