[UK-TUG] Fwd: NOT CONFIDENTIAL: Advance notice of messages to uk-tug-announce

[David Saunders]

On 28/10/2021 19:26, Arthur Reutenauer wrote:
> [...] I also note that contrary toUK-TUG, TUG is operated under strict 
> not-for-profit rules (section501(c)(3) of the US IRS code).[...]

For information.

When I was Treasurer (probably around 2006, but I'm not sure) I was 
concerned about whether any `profits' UK-TUG might make could be 
taxable. I had an informal phone discussion with a tax barrister who had 
advised HMRC on many occasions, and he told me that UK-TUG would be 
covered by the "principle of mutuality". That is to say, UK-TUG's funds 
were owned by the members (collectively, not individually), and so any 
increase in those funds arising from membership subscriptions did not 
represent a profit -- you can't make a profit by trading with yourself 
-- and so would not be taxable. This is confirmed in the HMRC Company 
Taxation Manual at Section CTM 40105.

I am aware that my successor as Treasurer took a more cautious line and 
made provision for a possible tax liability, but in my opinion that 
provision wasn't really necessary, though of course it did no harm.

David