BIM52505 - Cemeteries: lump sums/graves maintenance

Receipts taxable when they arise - but allow a properly computed provision for future maintenance

Where a cemetery company receives lump sums under contract to maintain in perpetuity the repair of the graves and monuments and/or the decoration of the graves, you should regard such sums as receipts for tax purposes. But you should allow a properly computed (see BIM38395) provision for the estimated future expenditure on the maintenance, repair and decoration of the graves and monuments ( London Cemetery Co Ltd v Barnes, [1917] 7TC92). The Court regarded the decision in the case of Paisley Cemetery Co Ltd v Reith, [1898] 4TC1, as overruled by the principle of the decision of the House of Lords in Sun Insurance Office v Clark, [1912] 6TC59.

For guidance on how these rules should be applied in practice see BIM52510.