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HMRC internal manual

Business Income Manual

Specific receipts: insurance and other commission: sums to which trader is entitled

Statement of Practice SP4/97 paragraph 14 (see BIM40655) explains that a trader becomes entitled to commission and a taxable trading receipt will arise, where commission or a cash-back is:

  • received,
  • netted off (meaning that the trader’s entitlement to commission or a cash back is set off against the obligation to pay the full purchase price for goods or services so that only the net amount is paid), or
  • invested or applied in some way for the benefit of the trader.

Where there is no entitlement to commission or a cash back, a taxable trading receipt will not arise even if:

  • the trader pays a discounted purchase price,


  • extra value is added to the goods, investments or services obtained by the trader for the purchase price.