BIM40465 - Receipts: grants and subsidies: industrial development grants

In 1979 the Revenue lost an appeal at the Special Commissioners about whether an interest relief grant was taxable. As a result the government introduced legislation at, what is now, ICTA88/S93, to bring the tax treatment of the grants specified in that section, in line with what the Revenue had believed to be the law.

The Revenue’s interpretation of existing law was subsequently upheld in the High Court (Burman v Thorn Appliances [1981] 55TC493).

ICTA88/S93 (1) provides that where the recipient of such a grant is:

• carrying on a trade assessable under Case I of Schedule D, the grant should be treated as a trading receipt,
• carrying on the business of an investment company as defined in ICTA88/S130 (see CTM08020), the grant should be treated as income assessable under Case VI of Schedule D.

ICTA88/S93 applies to grants made under specified legislation. The only grants currently being made to which it applies are those made under Article 7, 9 or 30 of the Industrial Development (Northern Ireland) Order 1982.

ICTA88/S93 does not apply to grants, which are designated as made towards the cost of specified capital expenditure or as made by way of compensation for the loss of capital assets. Nor does it apply to a CT relief grant in Northern Ireland (see CTM02110).