Corporation Tax or Estates and Trust Tax

We are a non-profit flat management company where each leaseholder owns a share of the freehold. We created a reserve for a roof fund within our existing (service charge) bank account and received interest on the account this year. I have read that we will now have to file a Corporation Tax return in order to pay tax on the bank interest we have earned. However, I have also read that we need to register with the Tax Estates and Trust office and file an Estates and Trust return as the monies held by the company are held on trust. Can you advise which one it is and what we need to do to ensure we set everything up properly and pay the correct tax on the interest we have earned.

Hi,
The distinction between a Corporation Tax return and an Estates and Trust return depends largely on whether HMRC views the fund as being held by the company in trust or as part of its income. For a flat management company, the position is often:
• Corporation Tax Return is filed for interest income, since HMRC usually considers the company liable for tax on interest earned in the company’s name.
• Trust Status may not be necessary if the company’s primary role is managing service charges, but it’s important to check with our Trust and Estates team, who may have specific requirements based on the setup of your accounts.
Please contact HMRC's Trust and Estates team on 0300 123 1072, or in writing to:
Trusts
BX9 1EL
United Kingdom
Thank you.