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HMRC internal manual

Company Taxation Manual

Particular bodies: local enterprise organisations and urban regeneration companies

Local enterprise organisations: CTA09/S83

BIM47610 explains the background to local enterprise (previously “trade”) organisations, which require various types of approval if donations made by a trader are to be tax deductible (see below). The approval provisions are at CTA09/S84.

A body seeking approval may take various forms and it will not necessarily be called, for instance, a ‘local enterprise agency’. CTA09/S83 defines local enterprise organisations as meaning

  • a local enterprise agency (LEA)
  • a training and enterprise council (TEC)
  • a Scottish local enterprise council (LEC), or
  • a business link organisation.

In many cases the organisations will be bodies corpoprate or unincorporated associations but in some they may be trusts. However, in all cases there must be a rule preventing the distribution of income or profits to members or those in control.

Approval may be withdrawn by the Secretary of State (etc) from a specified date where the conditions of approval are not being met. Although withdrawal of approval may be made retrospectively, in practice, retrospective contributions should not be disallowed where they have been made in good faith.

Urban regeneration companies: CTA09/S86

These are bodies involved in organising and delivering major regeneration projects in key urban locations. They are designated urban regeneration companies by Treasury order. They may take various forms but the majority are companies limited by guarantee. Most are not for profit organisations.

Taxation of LEAs, TECs, LECs & URCs

The bodies are liable to tax in the normal way, depending on the form they take, on any investment income (interest, rents etc) and on any trading profits should they engage in trading activities. Contributions, for which a deduction is allowed to the contributor under ITTOIA05/S82 (IT) or CTA09/S82 (CT) should not be included as income of the body unless, very exceptionally, the contributor has stipulated that his contribution was specifically for use in the trading activity to cover revenue rather than capital expenditure of the trade.

The treatment of Government Grants should follow normal principles (see BIM40455).