Tax liabilties for clubs & flat management companies

Following the abolition, with effect from 1 April 2006, of the nil rate band for corporation tax there was concern that many small clubs and societies, which previously had no corporation tax liability, would have to pay such tax on very small amounts of income and have the burden (and potential cost) of completing company tax returns. This would be particularly harsh on those organisations whose sole income was a small amount of bank interest.

Where the annual corporation tax liability of a club or unincorporated association is not expected to exceed £100 and the club is run exclusively for the benefit of its own members, there should be no requirement to file corporation tax returns subject to review every 5 years.

This practice is also extended to a property management company if it’s business consists of the management, on a non profit making basis, of a block(s) of flats or apartments for the owners, lessees or tenants of the flats or apartments and the company’s articles of association contain rules to ensure only the persons having an interest in the property under management own the shares in the company.

Any club or society that is unclear about its tax position should ask its local HMRC office for advice.