BIM52520 - Crematoria: sale of niches

Agreement with Federation of Cremation Authorities

In computing the profits of companies acting as cremation authorities, you should adopt the following method (which has been agreed with the Federation of Cremation Authorities) for receipts and expenses in connection with the provision of niches

1. Treat receipts from the sale of niches as trading receipts.
2. Allow a sum equal to two-thirds of the cost of niches sold as a trading expense.
3. Treat the cost of a niche as composed of-

i. General cost, that is a proportion of the cost of the building of which it forms part, and
ii. specific cost, that is the cost of its own special formation, such as marble lining and tablet.

4. Take general cost into account only in the case of buildings wholly or mainly used for the purpose of providing niches. In other cases, the allowance under (b) will be two-thirds of the specific cost alone.
5. General cost should exclude the cost of the land (in respect of which you should allow no deduction), and may normally be arrived at by allocating the aggregate cost of the building to individual niches in proportion to the area occupied by the latter. Where, however, the cremation authority allocates the aggregate cost of the building to the niches on some other systematic basis, you may accept that basis in arriving at the general cost. As a rule, cremation authorities can supply information as to the actual specific cost without difficulty.