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HMRC internal manual

Company Taxation Manual

Particular bodies: trade associations: special arrangement

Ordinary trade protection associations, formed to protect the common interests of their members and funded by their annual subscriptions, are normally non-trading concerns without trading income.

A member of such a trade association is entitled to deduct such part of the association subscription as is applied by the association towards expenditure which would have been admissible as a deduction had it been incurred by the member directly (Lochgelly Iron and Coal Co Ltd v Crawford (1913) 6TC267). Unless there is other evidence effect cannot be given to a member’s right to deduction without the production of the association’s accounts (Grahamston Iron Co v Crawford (1915) 7TC25, see also BIM47420).

Following these cases a trade protection association arrangement was introduced.

A trade protection association, whose members’ subscriptions are not otherwise chargeable to CT, may make an application to adopt the arrangement. The arrangement amounts to a contractual agreement under which:

  • members’ entrance fees, subscriptions, levies and other payments (other than loans or payments of a capital nature), are allowed in full as deductions,
  • payments the association makes to members (other than loans or payments of a capital nature), are to be treated as their trade receipts,


  • the association agrees to be assessed to CT as trading income on any surplus of receipts over expenditure.

In effect the arrangement honours the Lochgelly principle but by a different route.

These arrangements can only be made with associations that have members who can be assessed on trading profits and who would normally be dealt with under BIM47420. However, see BIM47430 about subscriptions to small local associations. If an association that seems appropriate to the arrangement has not applied for it, send them details of how it works. Deal with any application according to the instructions given in the first sub-paragraph of CTM41215. On first contact the association make it clear that any application to adopt the arrangements will be referred to CTIS (Technical) for approval.