[Talk-GB] OSM leaving the UK?

[Russ Garrett]

On Tue, 6 Jul 2021 at 12:55, Frederik Ramm <frederik at remote.org> wrote:
> Yes, this isn't clear to many people but if you are a limited company
> then it doesn't matter much *why* someone gives you money, it's all the
> same for the taxman.

No - David is right here. By law, donations don't incur corporation
tax if they do not arise from a trade. I'm quite familiar with this -
for my sins I handle the accounts for several non-profits in England.

Unfortunately the precise definition of trade stems mainly from
century-old case law, and it is frequently easier to pay the tax than
it is to run the risk of having HMRC reclaim the money (or paying more
than the tax bill to a lawyer for advice). Especially if the
organisation is not aiming to build reserves and future tax losses can
be carried back.

This is probably the most understandable explanation from the HMRC
manuals: https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim58201

> But I can assure you that in the past, when the OSMF paid taxes nobody
> asked whether the money came from a donation or a membership fee or the
> sales of goods and services. Money in is money in, it's all the same to
> HMRC.

HMRC isn't going to ask you if you want to pay less tax. You have to
tell them that. Unfortunately, in my experience many accountants are
unfamiliar with these dark recesses of tax law.

At any rate, I'm not sure this is the correct place to argue this, but
I am always happy to advise if someone wants to drop me an email.

Cheers,

--
Russ Garrett
russ at garrett.co.uk