Commentary

B2.211 Insurance proceeds

Business tax
Business tax | Commentary

B2.211 Insurance proceeds

Business tax | Commentary

B2.211 Insurance proceeds

It is well established that the whole of the money received under an insurance policy in respect of stock destroyed is a trade receipt. The amount is not limited to the amount shown as the value of the stock in the accounts of the business.

The leading case on this issue is Gliksten1. In that case a large quantity of the company's stock of timber was destroyed by fire, and the written-down value of the destroyed timber stood in the books at £160,824. The company received from the insurance company £477,838, representing the replacement value of the destroyed timber. Only a small part of this sum was used in replacing timber because the current demand was for timber of a different kind. The company credited £160,824 as a trading receipt in its profit and loss account, and

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