B2.225 Trading income provided through third parties
Specific anti-avoidance provisions exist to prevent trading profits disguised as other receipts escaping the charge to tax7. These rules apply to trades, professions, vocations and to partners and individuals alike9
Where the rules apply, the disguised profits (referred to as a 'relevant benefit') are treated as a trading profit and taxed accordingly12.
A relevant benefit can be a payment (including a loan), a transfer of money's worth or any other benefit11. In essence therefore virtually anything can be a relevant benefit. It can also be indirect assumptions of liabilities11.
The amount of the relevant benefit to be included in the profits is either the amount of the payment or the principal lent of a loan, or in any other case, the higher of the market value or the cost of providing the benefit21.
The charge to tax will arise in the year in which the relevant benefit arises or, if trading has ceased before that year, the charge will apply to the year of cessation12.
There are several conditions to be ticked off before a relevant benefit falls within these rules. Notably if the loan etc is a normal trading transaction it will be excluded. In detail, the rules will apply if12:
• There is an arrangement14 in connection with the relevant trade to which T is either a party or which covers (wholly or