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HMRC internal manual

Company Taxation Manual

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Particular bodies: industrial and provident societies: unregistered associations treated as registered societies

ICTA88/S486 (9)

Certain co-operative associations not registered under the Industrial and Provident Societies Acts are to be treated as registered industrial and provident societies for the purposes of ICTA88/S486 (1) and (8), (see Section 486 (9)).

Such associations are accordingly entitled, if trading, to deduct share and loan interest in arriving at their trading income (CTM40565) or, if they are not trading, to treat such payments, for accounting periods ending before 1 April 1996, as charges on income and for accounting periods ending on or after 1 April 1996 as a Case III debit under the loan relationship provisions (CTM40570).

If two such associations amalgamate, a disposal of assets does not give rise to a CG chargeable to CT.

The associations concerned are co-operative associations resident in the UK formed to assist members who are carrying on business in agriculture, horticulture or the fishing industry. They may be corporate bodies, for example, companies, or unincorporated associations. Where such a co-operative association claims exemption from tax under Case I Schedule D on the grounds of mutual trading see CTM40950 onwards.

Before an association obtains the benefit of the above treatment, it has to satisfy the relevant Government department that it is in substance a co-operative association within Section 486 (9). An association that satisfies the appropriate authority receives a certificate to that effect. Any association claiming Section 486 (9) treatment for the first time should be asked to produce this certificate before the claim is accepted. Where the date from which an association qualifies is the commencing date of a CT accounting period, Section 486 (9) should be applied for that and succeeding accounting periods without further enquiry.

In other cases, the first accounting period for which Section 486 (9) should be applied is the accounting period succeeding that in which the date of qualification falls. Where an association to which a certificate has been granted ceases to qualify for Section 486 (9) treatment (for example, because of a change in constitution), the Office concerned is notified by CTIAA (Technical) of the effective date.