New queries, issue 4581

Points and possibilities

The tax treatment of redeemable points received by a trader from suppliers.

My client is a sole trader. His business consists of advising private householders on garden landscaping and then carrying out the work. One of his materials suppliers has instituted a scheme whereby points are allocated based on purchases. The points are valid for one year and each quarter he receives an update showing the number. For the first (and so far only) time he used the points to purchase materials which he used outside the business for his own garden.

At first sight the tax treatment seems clear by reference to HMRC’s Business Income Manual at BIM100210 because this seems akin to a cashback which if ‘received in the course of trading is a receipt of the trade...’. Reference is made to statement of practice 4/97 however and here there...