BIM55195 - Farming: receipts and expenses: insurance compensation: compulsory slaughter of animals

Farmers may insure privately against the compulsory slaughter of animals (see BIM55180). The insurance may cover any shortfall between Department for Environment, Food and Rural Affairs (DEFRA) compensation and the market value of the animal (as, in some cases, DEFRA pays only a percentage of the animal's value) and/or any consequential loss of profits (for instance, from loss of milk sales from a dairy herd). Payments of compensation received under such policies should be dealt with as follows:

• Compensation in respect of the value of the destroyed animal should be dealt with in the same way as the Ministry compensation (see BIM55180).
• Compensation for consequential loss should be treated as a trading receipt.