Part 2Trading income
Chapter 2Income taxed as trade profits
Trades and trade profits
16AF1Voluntary office-holders: compensation for lost profits
1
This section applies if a payment is made by a relevant authority to a person where—
a
the person holds a voluntary office with the authority,
b
the person carries out the duties of the office in a period in which he or she also carries on a trade, profession or vocation,
c
the payment is made solely to compensate the person for lost profits for the period (and accordingly does not exceed the amount of those profits), and
d
the payment would otherwise be dealt with under Part 2 of ITEPA 2003 by virtue of section 4(2)(b).
2
The payment is dealt with under this Part.
3
In subsection (1)(c) “lost profits” means the difference between—
a
the amount of profits that the person would have received from the trade, profession or vocation for the period if he or she had not carried out the duties of the office, and
b
the amount of profits that the person did receive from the trade, profession or vocation for the period.
4
For the purposes of subsection (1)—
“relevant authority” has the meaning given by section 299A of ITEPA 2003;
references to a person holding a voluntary office are to be construed in accordance with section 299A(2) and (3) of that Act.