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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: marketing boards

S153-S155 Corporation Tax Act 2009

A statutory body which:

  • is concerned with marketing of agricultural products or ensuring price stability, and
  • is required under a government approved scheme to pay the whole or part of its trading surplus into a reserve fund

is allowed a deduction in computing its trading profits for the sums it pays into the reserve fund out of its trading profits provided the fund satisfies certain conditions. The conditions are that:

  • no sum may be withdrawn from the fund without authority or consent from a minister or government department
  • if money has been paid to the body by a minister or department and is repayable, sums in the fund must be applied in making repayments
  • the fund is reviewed by a minister at fixed intervals and if the fund appears to exceed what is reasonably required by the body, the excess is withdrawn from the fund.

Any sums withdrawn by the body from the reserve fund are to be treated as trading receipts except where they are:

  • paid to a minister or government department, or
  • distributed to producers, or
  • refunded to persons paying any levy or duty.

Payments made to producers out of sums withdrawn from the reserve fund should be taken into account as trading receipts of the recipient.