A community-run store is reeling after being pursued by HMRC for 20% of its profits.
The Almondsbury Community Store in Bristol, a non-profit business that is run by local volunteers, was stunned when it received a corporation tax bill out of the blue.
Chairman of the store Alun Evans was devastated when he received the bill. “We’re a small store that relies on volunteers to survive, if we had to pay even one person we would make a loss,” he said. “The bill was for £1,030 for 2011/2012 which is a paltry amount compared to what the likes of Starbucks is getting away with.”
The store had a ‘dormant’ status when it first opened in 2009 but was overturned in 2011 and the business is now eligible for tax.
Alun applied for charitable status - as all profits from the store are either donated to charity or invested back into the business - but was turned down. In the three years since it opened over £15,000 has been donated to good causes.
A HMRC spokesman said: “If a company or organisation is trading, receiving income or carrying out business it usually deemed to be active for corporation tax purposes. Most unincorporated associations, including friendly societies and provident societies, are also liable for corporation tax.”
Alun expressed disappointment that HMRC would spend so much time chasing a small community-run business when there were larger issues at hand. “HMRC has probably spent more pursuing this meagre amount than they are going to actually receive from us,” he said. “Their priorities are all wrong, they need to focus on larger businesses and give smaller businesses a break.”
James Alcock, head of frontline at the Plunkett Foundation advised all community-owned stores to see if they were exempt from corporation tax.
“We are aware that some community shops have in the past been granted dormant status which means they are exempt from paying corporation tax; however, this is becoming less frequent,” he said. “Granting dormant status is discretionary so we would advise that community shops get in touch directly with their local tax office to discuss their individual case.”