CTM40530 - Particular bodies: industrial and provident societies: carrying on trade: allowable deductions

Where a registered industrial and provident society is carrying on a taxable trade payments in the nature of advertising expenditure, or payments for the purpose of maintaining the trading operations of the society or for the direct benefit of employees or customers, are normally allowable deductions, provided that they do not represent capital expenditure. Payments made for the benefit of members may usually be regarded as payments for the benefit of customers. In exceptional cases, where it appears that the members do not form the bulk of the customers, any doubt as to the admissibility of the expenditure on this ground should be referred to CT&VAT (Technical).

Detailed guidance on the allowability of certain entertainment expenditure under ICTA88/S577 (8) and (9) and ESCB7 are found at BIM45000 onwards.

Deductions should normally be given for the following expenditure:

• money actually expended for educational purposes, or for fêtes and celebrations,
• normal annual subscriptions to hospitals, convalescent homes and the like, from which the employees or members may derive benefit,
• subscriptions to such bodies as the Royal Agricultural Society, if in the nature of payments for information or benefit received,
• annual subscriptions to Men's and Women's Co-operative Guilds or to the International Co-operative Alliance, and expenses incurred by societies in the attendance of representatives at congresses etc, of those bodies, as distinct from contributions for any capital or political purpose.

The following are inadmissible as deductions:

• expenditure for political purposes,
• payments of a capital nature to memorial and/or other endowment funds,
• subscriptions to general relief funds or to national charitable bodies such as Barnardo's or the Royal National Institute of the Blind.