BIM45510 - Specific deductions: insurance: loss
of profits
Premiums on policies insuring against loss of profits from the
following contingencies are allowable deductions in computing
trading profits:
- a fire at the business premises (as
happened in the Canadian case of British Columbia Fir and Cedar
Lumber Co Ltd. AC441),
- interruption or loss of use of
income-producing assets such as business premises or plant and
machinery,
- interruption or cessation of the supply of
raw materials, stock, water supply, fuel etc needed to carry on the
business,
- events causing loss of profits for a
temporary period (see Mallandain Investments Ltd v Shadbolt [1940]
23TC367).
Guidance on policies insuring against loss of profits resulting
from the death, sickness, accident or injury of an employee or
director (including ‘keyperson’ policies) is at
BIM45525 onwards.
