I'm trying to find out whether a simple association of people as an amateur theatre group needs to pay any form of tax. If we have a bank account, and we spend money and receive box-office income which has had VAT deducted (by the operating theatre), is there any further need to render accounts and pay tax? No-one in the group benefits financially from the work of the group.

This is probably an elementary question which has been answered many times before, but I haven't been able to find an answer elsewhere on the web. Maybe someone could suggest references which will set out the tax situation.

Is the matter complicated when the group applies for public funding?

Thanks
Graham Topping

As a starting point, you may find the Inland Revenue Leaflet IR46 of some use, you can get it from
http://www.inlandrevenue.gov.uk/pdfs/ir46.htm

Also the leaflet CTSA/BK4 from
http://www.inlandrevenue.gov.uk/pdfs/ctsabk4.htm
and this link:
http://www.inlandrevenue.gov.uk/ctsa/index.htm
may be useful.

This link to the Customs & Excise 'Beginners Guide to VAT'(!!) may also help! http://www.hmce.gov.uk/business/vat/beginn...nners-guide.htm

Graham:

I'm not surprised that you have not been able to find much information about tax for voluntary organisations - a lot of the published material assumes you are either a trading company or a charity. It is an area of complex regulation, which changes often. NB even this answer might be out of date after the budget in April.

Some drama groups are registered charities. If so, they do not pay corporation, income or capital gains tax. BUT there are controls over trading income which makes the position a bit more complicated.

Other voluntary bodies, even though they retain their profits, do not qualify for tax exemptions, and may have to pay tax on the surplus shown in the account books at the end of the financial year.

If most of the income is from voluntary sources, then the Inland Revenue will not usually tax that surplus. If nothing else, you will probably pay interest on any cash with the bank. If in doubt, better to play safe and ask at the local tax office. I would be surprised if you were making large taxable profits!

Further information -

There is a chapter in the Methuen Amateur Theatre Handbook.

For a more in depth read, try Kate Sayer's book "A Practical Guide to Financial Management for Charities and Voluntary Organisations" - 2nd Ed published by the Directory of Social Change.