8.10.3 Dormant for Corporation Tax purposes
A small number of community benefit societies have been deemed by HMRC to be dormant for Corporation Tax purposes. This means they are not liable to pay Corporation Tax on their trading profits.
There are a number of reasons why HMRC may consider a society to be dormant for Corporation Tax purposes. These include small societies with a Corporation Tax liability of £100 or less, new societies that have not started trading, established societies that have ceased trading, or societies that have been established for non-trading purposes. This could include societies that have been established to own assets, such as land and buildings, but if such societies derive an income or capital gain from these assets, they may still be liable for Corporation Tax. In most cases any society engaged in a business activity will usually be liable to Corporation Tax, even if this activity is carried on for purposes other than for gain.
Determining whether a society is dormant for Corporation Tax purposes can be very difficult. HMRC will assess each case on its own merits and grant concessional exemption to any society it deems to be dormant for Corporation Tax purposes.
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