Corporation Tax Act 2009 section 633

Mutual trading companies

Section 633 explains how the loan relationships rules treat activities carried on by mutual trading companies, by excluding those activities from being regarded as a trade.

• Where a company carries on mutual trading, those activities are not treated as constituting the whole or any part of a trade for the purposes of the loan relationships rules.
• As a result, any loan relationship credits and debits arising to a mutual trading company do not fall to be taxed or relieved as trading credits and debits under Part 3 of the Act.
• Any provision in the loan relationships rules that depends on whether a company is party to a contract for the purposes of a trade does not apply to a mutual trading company in that respect.
• This ensures the special nature of mutual trading — where members trade with each other rather than with outside parties — is properly reflected in the corporation tax treatment of loan relationships.