Readers' forum : Taxable or not?

My six-year-old daughter attends a private Saturday school where Eastern European languages and culture are being taught. I recently attended the annual general meeting of the school governors and parents when the school finances were discussed. The school accountant presented a profit and loss account for the year ended 31 August 2016 which showed turnover of more than £80 000 net profit of around £18 000 and reserves of £60 000 accumulated over recent years.

I raised a question about the school’s legal status and was told that it is an association. The accountant advised that as such the school is not subject to any income tax. On the face of it this sounds good because the school’s articles of association state that its aim is not to make profits and any financial surplus is to be used for the school’s resources. However it...