S5 Income Tax (Trading and Other Income) Act 2005, S35Corporation Tax Act 2009

Damage to fixed or circulating capital

A payment received in respect of the permanent loss, deprivation or sterilisation of a fixed capital asset of the business ranks as a capital receipt (see The Glenboig Union Fireclay Co Ltd v CIR [1922] 12 TC 427, which is discussed in BIM35600).

In contrast, a payment that is compensation for some temporary interference with the trader's use of such an asset is a trading receipt (see Sutherland v CIR [1918] 12 TC 63; Ensign Shipping Co Ltd v CIR [1928] 12 TC 1169; Burmah Steam Ship Company Ltd v CIR [1930] 16 TC 67, the last of these is discussed in BIM35427).

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