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The general definitions of company, profits听and income听in this guidance manual are set out below, subject to any specific rules in context.

• Company听in the Corporation Tax Acts means any body corporate or unincorporated association, but does not include a partnership, a co-ownership scheme as defined by FSMA00/S235A (a collective), a local authority or a local authority association, CTA10/S1121(1).
• Profits听and income听are used in their strict CT sense - see CTM01110.

Bodies corporate and joint-stock companies

There is no modern definition of body corporate and the act of incorporation, which applies to both bodies corporate and corporations sole, is ancient.听 Lord Templeman struggled to find a definition in听Hazell v Hammersmith and Fulham LBC听(1992) and quoted Sir Edward Coke in the 1612 Case of Sutton's Hospital, which he understandably described as impenetrable, "largely incomprehensible in 1990".听 However, there is a definition in 鈥淗alsbury鈥檚 Laws of England鈥�:

A corporation aggregate has been defined as a collection of individuals united into one body under a special denomination, having perpetual succession under an artificial form, and vested by the policy of the law with the capacity of acting in several respects as an individual, particularly of taking and granting property, of contracting obligations and of suing and being sued, of enjoying privileges and immunities in common, and of exercising a variety of political rights, more or less extensive, according to the design of its institution, or the powers conferred upon it, either at the time of its creation or at any subsequent period of its existence.

Political rights here means decision making rights.

鈥淰ested by the policy of the law鈥�, a decision of the law, is important and explains why, under UK law, incorporation of both bodies and of corporations sole takes place by authority, originally the sovereign, later by parliament and finally by the executive, the Company Registrar acting on ministers' authority, the usual modern method of creating corporations aggregate.

The unincorporated bodies听known as 鈥渄eed of settlement companies鈥�, whose trustees held the business assets as there had been no incorprated entity capable of doing听so, were granted the privilege of incorporation, in return for registering their deeds, by the Joint Stock Companies Act of 1844, an initiative of William Gladstone as President of the Board of Trade.听 Incoporation was then facilitaed in a succession of Acts, the Limited Liability Act of 1855, a听consolidating Act听of 1856 which simplified the process, and the introduction of memorandum and articles in the Companies Act 1862.

Merely registering with an authority, as听UK limited partnerships do with the Company Registrar, is not incorporation.听 For Companies Act companies, however, by听specific legislation the Registrar acting for ministers听creates听companies for the subscribing members听-听see in particular CA06/S16.听 Lord Templeman鈥檚 speeches in the 1990 鈥淭in Council case鈥� (JH Rayner (Mincing Lane) Ltd v DTI) and in Arab Monetary Fund v Hashim and Others (No 3) (1991) emphasise the importance of formation by law (which may include foreign law).

Partnerships established in foreign territories, if on the facts they are partnerships in the UK Partnership Act 1890 sense, will not be bodies corporate as they are formed by the members and are not invested with permanent corporate status by authority.听 Their business is ultimately directed by the members (partners) as agreed among themselves and not by an entity through a mechanism set out in its constitutional documents (for instance by directors appointed or in general meeting).

鈥淛oint-stock company鈥�, although sometimes considered an archaic term, is defined in modern UK company law at CA06/S1041 as a company with a permanent paid-up or nominal share capital of fixed amount divided into shares of fixed amount, or held and transferred as stock (expressed in monetary amounts) and formed on the principle of having as its members the share or stock holders only.

Permanent capital of a company means the interests in it are not redeemable.听 This establishes a shield between the members of a company and its assets which prevents members鈥� creditors claiming those assets without court permission or liquidation of the entity, what in US legal theory is referred to as affirmative asset protection or entity protection, not the same as limited liability/member protection.听 Distributions have to pass through the shield before profits, and their correlative assets, are accessible.听 The members鈥� interests are in the entity itself, expressed as in its share capital or stock, rather than in its assets.

It is sometimes thought that only bodies corporate issue shares in capital, and that is usually the case, but during the industrial revolution, in later Georgian, Regency and early Victorian times, and before the 1844 Act mentioned above, companies raised funds by issuing shares in the capital of unincorporated joint-stock companies.

Classifying entities or concerns as 鈥渙paque鈥� or 鈥渢ransparent鈥�, see in particular INTM180030, is actually focusing on the tax treatment of the members, and is not directly related to incorporation although most opaque entities are bodies corporate.听 But a so-called Garland trust, see INTM339540, is opaque, and Scottish partnerships, which are often considered to display听"legal personality", an imprecise concept, are transparent.

Knowledge of the historical background helps in understanding the modern law.听 Section 53 of the Income Tax Act of 1806 (which was largely renacted in 1842 by Peel and still forms the historic basis of income tax) charged "Bodies Politick Corporate or Collegiate, Companies Fraternities Fellowships or Societies of Persons whether Corporate or not Corporate".听 This list became "bodies of persons" from the consolidating Income Tax Act of 1918 and was the formula in use when Corporation Tax succeeded income tax charged on bodies (corporate or uncorporate) in FA 1965.听 This charge was distinguished from the charge on partners carrying on a trade with a viw to profit, hence the exclusion of partnerships in the definition of company at CTA10/S1121.听 The reference to unincorporated associations reflects the historical background, it is not curiously concentrating on clubs and societies.

Nomenclature can be tricky.听 鈥淐ompany鈥� is听customarily used in the UK to mean incorporated company but its tax definition goes wider though nevertheless excluding partnerships for the reason just explained.听 And confusingly,听until the 1890 Partnership Act codified common law principles relating to what we now call partnerships, those whose members carry on a business in common, the word 鈥減artnership鈥� was also applied to companies as "large (or non-close) partnerships",听 hence听Lord Lindley鈥檚 1860 (first) edition of 鈥淎 Treatise on the Law of Companies, Considered as a Branch of the Law of Partnership鈥�.听 As the law in this area has evolved, rather than been established according to any particular plan or policy, it can be highly confusing.

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