Part 3Trading income
Chapter 6Trade profits: receipts
Other receipts
101Distribution of assets of mutual concerns
(1)
This section applies if—
(a)
a deduction has been made in calculating the profits of a trade for a payment to a mutual concern for the purposes of its mutual business,
(b)
the concern is being or has been wound up or dissolved,
(c)
a company (“the recipient”) which is carrying on the trade, or was doing so at the time of the payment, receives money or money’s worth representing the concern’s assets, and
(d)
the assets in question represent profits of the mutual business conducted by the concern.
(2)
If the recipient is carrying on the trade at the time the money or money’s worth is received, the amount or value of the money or money’s worth is brought into account as a receipt in calculating the profits of the trade.
(3)
If the recipient—
(a)
is not carrying on the trade at the time the money or money’s worth is received, but
(b)
was doing so at the time of the payment to the mutual concern,
the amount or value of the money or money’s worth is treated as a post-cessation receipt (see Chapter 15).
(4)
For the purposes of this section money or money’s worth represents assets of a mutual concern if it—
(a)
forms part of the assets of the concern,
(b)
forms part of the consideration for the transfer of the assets of the concern as part of a scheme of amalgamation or reconstruction which involves its winding up, or
(c)
consists of the consideration for a transfer or surrender of a right to receive anything falling within paragraph (a) or (b) and does not give rise to a charge to corporation tax on the company receiving it otherwise than as a result of this section.
(5)
If a transfer or surrender of a right to receive anything which—
(a)
forms part of the assets of a mutual concern, or
(b)
forms part of the consideration for the transfer of the assets of a mutual concern,
is not at arm’s length, the company making the transfer or surrender is treated as receiving consideration equal to the value of the right.
(6)
In this section references to a mutual concern are to a body corporate which has at any time carried on a trade which consists of or includes the conduct of mutual business (whether or not confined to the members of the body corporate).
(7)
For the purposes of this section a trade does not consist of or include the conduct of mutual business if all the profits of the trade are chargeable to corporation or income tax.
102Industrial development grants
(1)
This section applies if a company carrying on a trade receives a payment by way of a grant under—
(a)
section 7 or 8 of the Industrial Development Act 1982 (c. 52), or
(b)
Article 7, 9 or 30 of the Industrial Development (Northern Ireland) Order 1982 (S.I. 1982/1083 (N.I. 15)).
(2)
The payment is brought into account as a receipt in calculating the profits of the trade unless—
(a)
the grant is designated as made towards the cost of specified capital expenditure,
(b)
the grant is designated as compensation for the loss of capital assets, or
(c)
the grant is for all or part of a corporation tax liability (including one that has already been met).
103Sums recovered under insurance policies etc
(1)
This section applies if—
(a)
a deduction has been made for a loss or expense in calculating the profits of a trade,
(b)
a company carrying on the trade recovers a sum under an insurance policy or a contract of indemnity in respect of the loss or expense, and
(c)
the sum is not of a revenue nature.
(2)
The sum is brought into account as a receipt in calculating the profits of the trade (but only up to the amount of the deduction).
104Repayments under FISMA 2000
(1)
This section applies if—
(a)
a company carries on a trade, and
(b)
a payment is made to the company as a result of a repayment provision.
(2)
The payment is brought into account as a receipt in calculating the profits of the trade.
(3)
For the purposes of this section “repayment provision” means—
(a)
any provision made by virtue of section 136(7) or 214(1)(e) of FISMA 2000, or
(b)
any provision made by scheme rules for fees to be refunded in specified circumstances.
(4)
In this section “scheme rules” means the rules referred to in paragraph 14(1) of Schedule 17 to FISMA 2000.