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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Meaning of trade: mutual trading and members clubs: mutual associations: specific activities: trade protection associations: benefits to members of adopting HMRC arrangement

The arrangement allows any payments to members that are treated as trade receipts of the members to be deducted from the surplus the association has made. They are not treated as distributions under S1000 CTA 2010. Apart from this treatment, which is part of the terms of the arrangement, the normal rules apply. Trade protection associations do not usually trade, so S1071 CTA 2010 applies. Payments and benefits to members are not counted as distributions unless they come from:

  • profits on which Corporation Tax can be charged


  • franked investment income dividends - this is covered in CTM15550.

Payments to members from accumulated surpluses that have been assessed under the arrangement should not be regarded as distributions either. This is because these surpluses are not liable to Corporation Tax (which is collected only as a result of the contractual arrangement).