BIM100210 - Miscellaneous income: particular sources: cash-backs

HMRC set out its view of ‘cash-backs’ in Statement of Practice 4/97.

A cash-back received in the course of trading is a receipt of the trade to be included in taxable trade profits.

When a customer, not carrying on a trade or property business, decides to take their business to one concern rather than another, they are not providing that concern with a recognisable service such as to bring them within the scope of the miscellaneous income sweep-up provisions. This applies even if a commission or cash-back which may be received by the customer as consideration for the purchase of goods or services is paid under an enforceable contract separate from the contract for the supply of the goods or services itself.

However, if someone is paid for introducing some other customer to the supplier of goods or services then they are taxable under the miscellaneous income sweep-up provisions if:

• they are not otherwise chargeable; and
• the payment is not gratuitous (see BIM100110).