BIM24782 - Mutual associations: specific activities: property management companies
In many blocks of flats, services such as security, gardening, external decoration and the cleaning and decoration of common parts of the building are provided by a management company. Each occupant pays a regular charge to the management company.
If the property management company is carrying on a property business there can be no question of mutual trading. This is because mutual trading is exclusively a trading concept. There is specific statutory confirmation of the non-application of the mutuality principle to a property business at ICTA88/S21C.
The treatment to be adopted in respect of service charges received by occupier-controlled flat management companies as from 1 April 1998 is described at PIM1070.