Corporation Tax Act 2010 section 1070

Companies carrying on a mutual business

Section 1070 restricts how the corporation tax distribution rules apply to companies that carry on mutual trading, mutual insurance, or other forms of mutual business.

• Distribution rules for mutual businesses only apply to distributions made out of taxable profits (income and chargeable gains) or exempt ABGH distribution income, and only where the distribution goes to members participating in the mutual activities
• For mutual life assurance businesses, the distribution rules are disapplied entirely for distributions made to participating members that derive from the mutual activities
• Where a recipient company receives a distribution from a mutual business that derives from mutual activities, the tax character of that payment in the recipient's hands is not altered simply because it originated from mutual activities
• An "exempt ABGH distribution" is one that qualifies as a distribution solely because it falls within paragraphs A, B, G or H of section 1000(1) and is exempt under Part 9A of CTA 2009