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Management co-operatives are a type of housing association (CTM40405) which enables tenants of local authorities to participate in managing their housing accommodation. Such management co-operatives may acquire a lease from the local authority and sub-let the houses to members, or they may merely manage the houses on behalf of the local authority which remains the landlord of the members. »Ê¹ÚÌåÓýappre are no special tax reliefs for such co-operatives and they are taxed in the normal way. Exactly how a management co-operative will be taxed will depend on what its activities are.

Where a co-operative does not acquire a lease or other interest in land the question is whether the management service it provides to the local council falls within trading income. Like other housing associations, management co-operatives are normally ‘registered societiesâ€� in Great Britain, formerly industrial and provident societies, see CTM40505. One of the conditions for registration is that a society must not trade for profit. »Ê¹ÚÌåÓýappre are similar prohibitions in the statute relating to housing associations. »Ê¹ÚÌåÓýappse rules are not decisive and the question is what the society actually does as a matter of fact. A copy of the agreement between the local authority and the co-operative should be obtained and examined before reaching a decision. If the co-operative is not a ‘registered societyâ€� (see above) a copy of the deed setting up any trust should be examined.

In general, the management of a co-operative activity is unlikely to amount to the carrying on of a trade. This is because the agreement between a management co-operative and a local authority usually provides that the local authority re-imburses the co-operative’s expenses. Although a surplus may arise in any given accounting period, this is likely to be the result of timing differences rather than a genuine profit from trading activity. Where the facts in a particular case support this view, no tax liability will arise on the management activity. Liability to CT is therefore only likely to arise on investment income and chargeable gains.