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HMRC internal manual

Business Income Manual

Meaning of trade: mutual trading and members clubs: mutual associations: specific activities: Chambers of Commerce: trading?

As an initial step you need to consider two interrelated questions:

  • whether the Chamber is carrying on a trade, and
  • if the Chamber is trading, the extent to which that trade is mutual trading.

The Chamber may say that it is organised on a ‘not for profit’ basis. The absence of a profit-seeking motive does not preclude a finding of trading - see BIM24045.

Where the Chamber derives its income solely from members’ subscriptions and contributions then it is likely to be a non-trading entity - see BIM24001 and BIM24010.

The basis of this approach is that these transactions between the Chamber and the members are on a non-commercial or non-trading footing. This is because the object of the Chamber is to support the common purpose of its members rather than to trade with them. But profits derived from transactions with non-members in the ordinary course of a trade are taxable as trade profits.

In addition to acting as a collective voice for the membership, most Chambers also supply a range of services for which they make a commercial charge. These services include such matters as provision of certificates of origin, translation, training, telecoms, etc. Even where these services are supplied to members you will need to carefully examine any claim that such provision amounts to a mutual trade. The surpluses are usually applied for the benefit of all members and not just those who contributed to their creation. Where such is the case, it must follow that the class of beneficiaries is wider than the class of contributors. As explained in BIM24105 such a mismatch precludes mutual trading.

Receipts from outsiders for these services and other receipts such as advertising or commissions will fall outside mutual trading.

If the Chamber has both trading and non-trading activities you will need to apportion income and expenses between the two on a basis that is consistent with the facts. There is general guidance at BIM24450 onwards.