BIM24555 - Mutual trading: distributions: the basic approach
Where a trader makes a payment to a mutual concern, whether incorporated or not, and that payment has been allowed as a deduction in arriving at the trader’s profits assessable as trading income (for example, insurance premiums see BIM45585 first sub-paragraph) any distribution by the mutual concern (prior to its winding-up) should be regarded as a receipt of the recipient's trade etc to the extent that the distribution represents a return of payments made.
Similar treatment should be applied to sums received by a trader on, or as a consequence of, the winding-up of an unincorporated mutual concern.
For guidance on distributions by mutual traders that are bodies corporate see BIM24565.
For further guidance on distributions that are taxable on first principles see BIM24605.