8.1 Introduction

This section looks at the tax treatment of societies and their members, focusing on where this differs significantly from the tax treatment of companies and their shareholders, and where taxation may be an important factor in the offer of community shares.  Some forms of tax, such as Value Added Tax (VAT), where companies and societies are largely treated alike, are not addressed in this section.  Other forms of tax, notably Income Tax, are only addressed in areas where the tax treatment of co-operative and community benefit societies and their members differs significantly from that of companies and their shareholders. This section also outlines four forms of income tax relief applicable to community shares: Enterprise Investment Scheme (EIS); Seed Enterprise Investment Scheme (SEIS); Social Investment Tax Relief (SITR); and Community Investment Tax Relief (CITR). 

This section is not a comprehensive guide to the tax treatment of societies and their members. Its aim is to alert community shares practitioners to relevant matters, and direct them towards the more detailed guidance available in the HMRC Manuals and Helpsheets (See www.hmrc.gov.uk ). HMRC also provides dedicated telephone helplines for advisers, and in more complex cases will respond to requests for Non-Statutory Business Clearance, which is written confirmation of HMRC’s view of the application of tax law to a specific transaction or event. 

If you have any questions or suggestions for new information you would like to find in the Handbook, contact the team by email at [email protected]