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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Particular bodies: registered societies: general

The Cooperative and Community Benefit Societies Act 2014 (CCBS14) became law on 1 August 2014 and consolidated all of the legislation relating to Great Britain (GB) Industrial and Provident Societies.

From that date those GB societies will no longer be called industrial and provident societies, rather they will be co-operative or community benefit societies or credit unions, though they are termed registered societies throughout the 2014 Act and the updated tax legislation. In Northern Ireland the societies will continue to be known as industrial and provident societies or credit unions.

All societies which were registered under Industrial and Provident Societies Act 1965 or earlier Acts are now treated as registered under CCSB14.

Throughout this guidance they will all be referred to as registered societies (i.e. including Northern Ireland (NI) societies, unless otherwise indicated).Societies registered under CCSB14 and equivalent NI legislation are bodies corporate.  Registered societies are therefore companies for tax purposes and are liable to CT in respect of their profits, which are computed in accordance with normal rules as amended by the Corporation Tax Acts (but see CTM40150 for the treatment of credit unions).

The key differences in treatment between registered societies and other companies are that

  • the share interest and loan interest paid by a registered society, and share interest paid by an agricultural co-operative, are treated as interest under a loan relationship and are not treated as distributions within CTA10/PART 23;

and, for those societies carrying on a trade,

  • the dividends paid by reference to the transactions a member has with the society (sometimes called the‘divi’) are deductible  and are not treated as distributions within CTA10/PART23.

The legislation governing the tax treatment of the societies and their members was previously to be found in ICTA88/S486 and S487. This is now spread throughout the Taxes Acts. The provisions can be found as follows:

  • the treatment of share and loan interest in the hands of both


  • the society – treated as a non-trading loan relationship debit CTA09/S499 and
  • the recipient – treated as a receipt of interest ITTOIA05/S379 (1);


  • the disapplication of the company distribution provisions to payments of share and loan interest by a society, CTA10/S1055;
  • no gain/no loss treatment on a transfer of engagements from one society to another TCGA92/S217D;
  • the treatment of dividends, bonuses, discounts etc in respect of transactions between the member and the society:


  • the society gets a deduction from its profits CTA09/S132,
  • the recipient will be taxed or not on the receipt depending on what it represents in their hands though this is not specified in the legislation, and
  • the distributions legislation is again disapplied CTA10/S1056;


  • payment of the share or loan interest is to be made gross to the recipient ITA07/S887(1), except for non UK residents;
  • returns to HMRC of the gross payments made to the members of over £15, ITA07/S887 ((2) and (3));
  • societies which fail to make returns to HMRC get no relief for the payments (CTA09/S500).

CTM40515 deals with the deductibility of the ‘divi’ and CTM40513 with the non-application of distribution treatment to interest and share dividends.  CTM40520 deals with the application of loan relationships to share and loan interest interest paid. CTM40530 deals with the treatment of the recipient member.

Examples of the activities of registeredsocieties include:

  • retail co-operatives,
  • community shops/post offices,
  • sports clubs, supporters trusts,
  • community associations,
  • housing associations / registered social landlords, and
  • credit unions.

Close companies

A registered society is not a close company because of CTA10/S442.