B2.474 Trade associations
Trade associations are within the charge to corporation tax. A number of trade associations have agreed, under the terms of an arrangement made with HMRC, to pay tax on the surplus of their income over expenses. This arrangement with HMRC is only appropriate in those cases where the subscriptions in question are not otherwise chargeable to corporation tax, ie where the activities of the trade association do not amount to a trade1. The arrangement with HMRC 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 which the association makes to members (other than loans or payments of a capital nature) are to be treated as their trade receipt and
• the association agrees to be assessed to corporation tax on any surplus of receipts over expenditure1.
The arrangements can only be made with associations which are trade associations2 and which have members assessable on trading income, and who are entitled to deduct part of their subscription to the association. However, an absence of an HMRC arrangement should not be taken as grounds for disallowing a subscription to a local trade association as a chamber of
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