BIM52510 - Cemeteries: lump sums/graves maintenance: computing profit

What to do in practice

Where the taxpayer agrees

Where a taxpayer receives a lump sum etc. in the circumstances set out at BIM52505 you may adopt the following practice in computing the Case I profits

1. Exclude such lump sums from the trading receipts.
2. In lieu thereof, bring into credit the whole of the income (after deduction or payment of tax) arising from the investment of the lump sums as if it were an ordinary untaxed trading receipt. (Such income would usually be assessed under Case III, IV or V of Schedule D as a separate subject of liability).
3. Allow the actual annual expenses of maintenance etc of the graves as a deduction.

However

Where the taxpayer objects to the practice described above you should adopt the following method

1. The lump sums received during the year should be brought into the computation, less the capitalised value of the corresponding liability for maintenance etc.
2. The actual expenses of maintenance etc of the graves should be allowed as a deduction.
3. All income derived from the investment of the lump sums should be excluded from the Case I computation, any untaxed income being assessed under Case III, IV, or V, as a separate subject of liability.