Charity tax returns: what to look out for

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We’ve had a few charities contact us recently to say they received a penalty notice for the late filing of a corporation tax return. In each case, the charity was unaware they had been asked to submit a return. So, what should a charity be looking out for to avoid this scenario?

Notice to deliver

Charities are usually only periodically requested to file a corporation tax return – this would typically be around every five years. When a charity is requested to file a return, they receive a letter shortly after their financial year-end. This letter is called a ‘Notice to Deliver’, which is a formal request from HMRC to complete and file a tax return.

Payment reminder

In most cases, a charity’s income and chargeable gains will all be exempt, however, it is HMRC practice to issue a payment reminder around eight months after the year-end, to warn entities that their corporation tax payment is due in one month’s time. This second letter should act as a warning sign that HMRC are expecting a tax return. In a year where a charity is exempt from filing, HMRC won’t issue these letters. These payment reminders highlight the need for timely action, as the charity’s tax return will need to be filed in around four months.

Agent authorisation

HMRC have an online portal where corporation tax agents can see their client’s filing requirements and payments due etc. This is really useful for charities as your agents can look ahead and see for which years, if any, HMRC are expecting a return to be filed. The authorisation is simple to set up, all your agents need is your unique taxpayer reference (‘UTR’), which they will then use to request an authorisation code be sent out to you – if you don’t have the UTR, your agents can help you request this too. The charity then forwards this code to their agents to complete the process.

Key dates

An example of the key dates to look out for are as follows:

Financial year-end31 March 2022
Notice to deliverBy 30 April 2022
Payment reminderEarly December 2022
Payment deadline1 January 2023
Submission deadline31 March 2023

We’ve used 31 March in our example above, as this is a popular year-end for charities. However, if your charity has a different year-end, the key dates will be the same distance from your year-end. For example, a 31 December year-end will also expect to receive a notice to deliver by the end of the following month, 31 January 2022.

If you have any questions, you can contact Conall at:

Author: Conall Boyle, CT: Corporate Tax