Residents Management Company, DLAs, GR and tax liability

[doobrey]

I am a Director of a Residents Management Company which is in the process of the buying our freehold for the benefit of the leaseholders. The company has no profit motive and is a company limited by guarantee.

Our intention was to be dormant but we have some non-participating flats and therefore have to cover a shortfall in purchase funds using DLA funding. Participating leaseholders have agreed to make payments to service the borrowing. The company will also receive some income from ground rent in the medium term from the non-participants. This causes headaches for us in terms of admin, accounting, and potentially Corporation Tax. From reading around the subject a bit I understand that we may be treated as a trust for tax purposes, but it seems that not everyone agrees on this treatment.

Main question: Leaseholders will be paying a modest amount (< £100) annually to service DLAs necessary to provide funds for purchase. Can these be Membership fees? Membership fees are not subject to tax. For tax purposes I think we want the company to be loss-making and kept solvent by the Members (which reflects the reality, I would say.)

More generally, any advice on how we should avoid pitfalls? Could/will the company be a Trust, or Mutual?