Are you paying Corporation Tax? Find out how to register an exemption...

Each year, many community shops pay corporation tax -  a 20% tax on their taxable profits. However, it has come to light that community shops using the Industrial and Provident Society for the Benefit of the Community structure can be registered as dormant for Corporation Tax purposes.

The Plunkett Foundation confirmed this benefit for community shops with HMRC following Almondsbury Community Shop in Gloucestershire making a recent breakthrough.

The exemption can be made on the condition that the community shop is a not for profit business and that any profits made are not distributed to any indivuals including shareholders, members, staff etc. It is acceptable to use profits to pay the wages of staff, for instance, but not to issue dividends or bonuses to directors or owners (i.e. members).

To register your community shop as dormant from Corporation Tax, you will need to write to your local HMRC office enclosing copies of your Articles of Association or Model Rules, and explaining:

• that you are non-for-profit business
• that you have an IPS legal structure
• the purpose of your community shop
• what you do with your profit

If you need any further guidance on this, including contact names at the HMRC, please contact James Alcock at the Plunkett Foundation for further information.