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HMRC internal manual

Company Taxation Manual

Particular bodies: registered societies: claims for exemption

A registered society is not exempt from corporation tax. CTIS has seen a number of claims from, for example, community shops arguing that they are exempt  because they are a registered society and/or a not for profit organisation.  As in CTM40505 a registered society is a body corporate and broadly pays tax under the same rules as any other company. Equally a registered society can get the benefit of the same reliefs as any other company, unless the corporation tax acts specifically prevent it.

A body such as a community shop is trading and is potentially in competition with other shops and businesses. It does not trade with a view to making a loss, rather it will try to make a profit, but, rather than distribute its profits to its members, any profit/surplus is likely to be ploughed back in to the business or to other community projects. That does not however  mean that it will be exempt from tax.

Any claim that a registered industrial and provident society qualifies for full or partial exemption from liability to tax should therefore be considered critically dealt with as follows.

Where the such a claim for full or partial exemption is:

  • from liability as trading incomeunder Case I of Schedule D on the grounds that the societyit is a mutual trading concern, it should be dealt with in accordance with the guidance at CTM40950 onwards.
  • on the grounds that it is a charity, it should be submitted to HMRC Charities.

Special types of society

As regards:

  • a society carrying on operating as a club, see CTM40100 onwards,
  • a society registered as a credit union, see CTM40150 onwards.
  • a society registered as a housing association or registered social landlord, see CTM40400 onwards.