There are various special rules that apply in calculating the profits from a trade of waste disposal. The rules cover a deduction for site preparation expenditure, allocation of site preparation expenditure and site restoration payments.
Most waste disposal sites have a useful life of only four or five years.
Deduction for site preparation
A specific deduction is available for the expenditure incurred on preparing a site so that it can be used for waste disposal. The deduction covers expenditure that is not capital and would otherwise be unrelieved for tax purposes as it does not qualify for capital allowances.
A deduction is allowed for the purposes of calculating the profits of a trade for a period of account in which waste materials are deposited on a waste disposal site if the person or the company carrying on the trade (the trader), or a predecessor, has incurred site preparation expenditure in relation to the site in the course of carrying on the trade, and at the time the trade first deposits waste materials on the site, the trader holds a waste disposal licence which is then in force1.
For these purposes, 'a predecessor' in relation to the trade is a person who has ceased to carry on the trade carried on by the trader or ceased to carry on the trade so far as relating to the site, and has transferred the whole site to the trader2. For these purposes it does not matter whether or not the