Dear Colleague,

As some of you will be aware, HMRC is currently running a project on Corporation Tax and political parties.

HMRC has issued 108 letters to Liberal Democrat parties and groups, either requesting registration or the submission of Corporation Tax returns.

They have informed us that 66 Lib Dem organisations (61%) have responded. Of those responses:

• 32 filed returns that HMRC considers to be incorrect;
• 9 have not yet registered; and
• 1 has registered but not yet filed a return.

There are currently differing views on whether fundraising income is subject to Corporation Tax, specifically in relation to the mutual trading exemption. HMRC is discussing this issue with its Policy Team and will provide its official position shortly.

Until we receive further clarification, we advise that you pause any activity with HMRC relating to Corporation Tax beyond registering.

HMRC is aware of this position. They have told us they are going to be contacting people about non-registration but not other issues until they have sorted their policy position. If you do receive any pushback, please email compliance@libdems.org.uk.

We are also in contact with the other political parties, and they are in the same position.

Once we have received HMRC's response, we will issue further guidance and details.

Our Corporation Tax guidance remains up to date and can be found here:

Best wishes,