The possibility that in certain circumstances a receipt under an exclusivity agreement may have to be repaid does not cause it to be characterised as a loan (see Smart v Lincolnshire Sugar Co Ltd [1937] 20 TC 643). The two issues to consider are:

whether the receipt is on capital or on revenue account

if revenue, the time at which it should be recognised

Revenue or capital?

Whether a receipt under an exclusivity agreement is revenue or capital, or mixed, depends upon the purpose for which it is paid. For example, see Evans v Wheatley [1958] 38 TC 216, CIR v Coia [1959] 38 TC 334, McLaren v Needham [1960] 39 TC 37 and Walter W Saunders Ltd v Dixon [1962] 40 TC 329.

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