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HMRC internal manual

Company Taxation Manual

Particular bodies: trade associations: payments to members

The arrangement allows any payments to members that are treated as trade receipts to be deducted from the surplus the association has made. They are not treated as distributions within CTA10/PART23.  Apart from this treatment, which is part of the terms of the arrangement, the normal rules apply. Trade protection associations do not usually trade, so CTA10/S1071 applies. Payments and benefits to members are not counted as distributions unless they come from

  • profits that are charged to CT (less the CT on those profits) or
  • franked investment income.

Payments to members from accumulated surpluses that have been assessed under the arrangement should not be regarded as distributions either.  This is because these surpluses are not liable to CT (that tax being collected only as a result of the contractual arrangement).