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HMRC internal manual

Business Income Manual

Meaning of trade: mutual trading and members clubs: mutual associations: specific activities: property management companies

In many blocks of flats, services such as security, gardening, external decoration and the cleaning and decoration of common parts of the building are provided by a management company. Each occupant pays a regular charge to the management company.

If the property management company is carrying on a property business there can be no question of mutual trading. This is because mutual trading is exclusively a trading concept. There is specific statutory confirmation of the non-application of the mutuality principle to a property business at S321 Income (Trading and Other Income) Act 2005, S260 Corporation Tax Act 2009.

The treatment to be adopted in respect of service charges received by occupier-controlled flat management companies is described at PIM1070.