CTM41020 - Particular Bodies: public bodies

Government Departments are not subject to Corporation Tax, they have Crown exemption. This includes Trading Funds.

However Non-Departmental Public Bodies (NDPBs), variously called Non-Government Organisations (NGOs) or quangoes are not Government Departments (the clue is in the name!) and do not (with a very few exceptions) enjoy Crown exemption.

They are deliberately established in such a way as to have separate legal identity from the Department(s) creating them but it is that separate legal identity which means that they are generally liable to Corporation Tax.

ICTA88/S6 states that Corporation Tax shall be charged on the profits of companies. It also states that profits means income and chargeable gains.

The term company is defined in ICTA88/S832 as:

…any body corporate or unincorporated association…

NDPBs can take a variety of legal forms. Those established as Companies Act Companies (either limited companies or companies limited by guarantee) are clearly within the scope of Corporation Tax, they are ‘companies’.

Most however are not Companies Act companies but are established separately by legislation. The statute generally states:

‘there will be a body corporate known as ‘XYZ’’.

As above this means they are squarely within the Corporation Tax provisions.

All of the Corporation Tax provisions will therefore apply to NDPBs whether they are set up as companies or as bodies corporate. They should be making CTSA returns and paying tax accordingly.

However many of them will not be undertaking a trade and thus will not have trading profits. Any grant income is unlikely to be taxable, but see the instructions in BIM40450+. Whether or not a trade exists depends on a detailed consideration of the facts (see BIM20050+).

Whether or not an NDPB is chargeable on any trading income, it will be chargeable on any investment income, e.g. income from letting or bank interest, and on any chargeable gains.