What is it?
A Charitable Society is a Community Benefit Society that has been granted exempt charity status by HMRC. This means that HMRC recognises that the society is charitable and so the charity tax exemptions apply, but it is not registered with the Charity Commission. A charitable society can be a body with a wide membership (such as its charitable beneficiaries) but it cannot distribute surpluses to its members.
Unlike other structures, registered societies including CSs are exempt from the Financial Services and Markets Act 2000, which means they are able to seek social investment direct from the public in the form of loan stock or shares. However, HMRC will need to be sure that there are strict limits on the interest payable to investors if the society is to retain its charitable status.
What are the accounting and filing requirements?
- Accounts need to comply with the FRSSE and the Charity SORP.
- Accounts need to be filed with the Financial Conduct Authority within 7 months of the year end, together with form AR30.
What are the tax implications?
- Must register for VAT if making taxable supplies over the threshold.
- Must file a corporation tax return only of requested to do so by HMRC.
- If a charitable society pays interest to a creditor or member who is an individual, it need not deduct tax, but must make a return of interest paid within 3 months of its year end (S887 Income Tax Act 2007).
Slade & Cooper services
- Preparation of accounts and accountant’s report or audit exemption report
- Audit if income exceeds the threshold of £250,000
- VAT advice so you know when VAT registration might be necessary, and can deal with any partial exemption and outside the scope issues.
- Corporation tax returns when requested to file by HMRC.
- Payroll bureau