Annex 1: Minor changes in the law Change 4: Trading income: omission of references to a company carrying on a profession or a vocation: sections 36, 188, 452, 456, 673, 837, 851, 860, 864, 880, 883, 886, 939, 957, 1071 and 1119
This change omits references to a profession and to a vocation where the source legislation refers to the carrying on by a company of a trade, profession or vocation.
The change is reflected in numerous sections in Part 3 of CTA2009 (trading income). It is included in the origins of the main provisions affected in CTA 2009, where it is acknowledged as Change 2. It is carried through into sections 36, 188, 452, 456, 673, 837, 851, 860, 864, 880, 883, 886, 939957 and 1071 of this Act. It is also carried through into paragraph (b) of the definition of “period of account” in section 1119 of this Act.
There are strong grounds for believing that for the purposes of the charge to corporation tax there are no activities that should be taken to constitute the carrying on of a profession or vocation by a corporate body or unincorporated association. There was a full discussion of the issues involved in Change 2 in Annex 1 to the commentary on CTA 2009.
It is theoretically possible that the application of trading income rules to activities that a company could argue is a profession or a vocation could lead to a change in the measure of taxable profits.
This change is in principle adverse to some taxpayers and favourable to others. But it is expected to have no practical effect as it is in line with generally accepted practice.