Annex 1: Minor Changes in the Law Change 2: Trading income: omission of references to a company carrying on a profession or a vocation: section 35 (and other sections) Corporate bodies and professions FA 1965
The drafters of FA 1965 proceeded on the basis that a corporate body cannot carry on a profession.
It is true that section 53 of FA 1965 (see now section 9 of ICTA) provided that:
Therefore, if a corporate body were to have profits from carrying on a profession those profits could be calculated and taxed under Schedule D Case II as applied for corporation tax purposes:
But it is significant that professions are not anywhere catered for explicitly in the corporation tax code introduced by FA 1965.
So, for example, the following provisions of FA 1965 did not cater for professions:
	Section 50 brought non-UK resident companies within the charge to corporation tax, but only if they carried on a trade in the United Kingdom through a branch or agency. (See now section 11 of ICTA.)
	Section 51 set out the rules for determining when a company’s accounting period begins and ends.Subsection (3)(c) provided that an accounting period ends on “the company beginning or ceasing to carry on a trade, or to be, in respect of a trade, within the charge to tax”. (See now section 12(3)(c) of ICTA.)Subsection (5) set out the rule that applies if “a company carrying on more than one trade makes up accounts of any of them to different dates”. (See now section 12(5) of ICTA.)
	Section 54(2) provided that “where a company begins or ceases to carry on a trade, or to be within the charge to corporation tax in respect of a trade” the profits computation was on the basis that the trade commenced or ceased. (See now section 337(1) of ICTA.)
	Section 56(2) dealt with capital allowances to be made “in taxing a trade”. They were to be treated “as a trading expense”. (See now sections 247 and 251 of CAA where the income tax and corporation tax rules are combined.)
	Sections 58 and 59 set out the loss relief rules, wholly in terms of trades. The special rule for “trade charges” in section 58(8) referred to “payments made wholly and exclusively for the purposes of a trade”. (See now sections 393 and 393A of ICTA.) This carries through to group relief as a result of the reference to section 393A in section 403ZA of ICTA.
	Section 61 provided for continuity in the case of a company reconstruction without change of ownership - “The trade shall not be treated as permanently discontinued”. (See now section 343(2) of ICTA.)
Section 89 (see now section 6(4)(b) of ICTA) provides that in the provisions discussed above:
If the corporation tax code was intended to cover professions it is extraordinary that the references to trades in these key provisions were not extended to professions. Nor is there any mention of professions in the 1965 Notes on Clauses.
In line with the apparent intentions of the 1965 legislation, it has long been the Inland Revenue/HMRC view that a corporate body cannot carry on a profession for corporation tax purposes. Where a corporate body carries on a business consisting of the provision of professional services the practice is to treat it as carrying on a trade.