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HMRC internal manual

Business Income Manual

Meaning of trade: mutual trading and members clubs: allowable expenditure: contents

Introduction and layout of guidance

Where the trade satisfies the requirements for mutual trading and the trade is only carried on with members, there will seldom be any reason to consider the trading deduction rules - the profits not being taxable and any losses not being allowable.

The issue will however arise where the trade is only partially mutual; for example an otherwise mutual trade is also carried on with non-members.

The normal rules:

  • capital/revenue distinction (see BIM35000 onwards),
  • wholly and exclusively (see BIM37000 onwards) and
  • specific statutory rules (for example S58 Income Tax (Trading and Other Income) Act 2005 - see BIM45800 onwards)

apply to a mutual trader in just the same way as they apply to a non-mutual trader.

The guidance that follows covers: