BIM80115 - Case VI: General: casual income: commission

Commission received comes within Case VI where:

• the sum in question does not fall under any other head of charge, and
• there is an enforceable contract; under the contract the taxpayer must provide some service or facility in exchange for the payment.

Statement of Practice 4/97 explains the tax treatment under Schedule D Case VI of commission and cashbacks received and related deductions.

ORDINARY RETAIL CUSTOMERS

Paragraph 20 of SP4/97 accepts that a customer's decision to take his or her business to one concern rather than another will not amount to the provision of a sufficient service or facility by the customer, even if the commission or cashback received by the customer as consideration for the purchase of goods or services is paid under an enforceable contract which is separate from the contract for the supply of the goods or services themselves.

However, as indicated in paragraph 19 of SP4/97, where the commission is received as consideration for introducing some other customer to the supplier of goods or services the third condition for Case VI to apply will be satisfied. Liability under Case VI will then arise if the first two conditions are also satisfied.