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HMRC internal manual

Business Income Manual

Grant aided bodies: training schemes

Practical considerations

Where most of the financial support is received in the form of grants or donations rather than by income generated from the sale of goods or the provision of services, and there is no possibility of private gain for the proprietor, for example in the form of withdrawing profits, dividends or on dissolution, the activity is unlikely to constitute a trade.

Schemes involving the sale of goods etc

Some training schemes generate trading income from the sale of goods or services. In most cases however the activity is heavily dependent upon grants etc, and there is the difficult practical problem of determining to what extent, if any, the grants or donations etc can be apportioned between the trading and non-trading activities. It may be unproductive to attempt to assess such profits where:

  • the scheme agent or sponsor cannot benefit from these profits,
  • the profits are taken into account by the donor in determining future funding,
  • they can be ignored as minimal.

Other local enterprise schemes for job training or creation

Many local enterprise schemes are organised to supplement training projects. They may receive financial support from a variety of sources, for example, Government and Local Authorities as well as from the major businesses in the locality. You should apply the same criteria as for underlying projects in determining whether there is a trading source and how the profits are to be computed.