Commentary on Sections Overview Overview Section 171: Allocation of ancillary capital expenditure
705.This section contains special rules for allocating ancillary capital expenditure to a period of account. It is based on section 91(1) and (3) to (8) of ICTA.
706.See section 169(4) of this Act for the definition of “ancillary capital expenditure”.
707.Subsection (1) calculates the ancillary capital expenditure attributable to a relevant period. It does this by allocating part of the total of all ancillary capital expenditure incurred before the end of the relevant period (the “residual expenditure”) to that period in the same proportion that the number of grave-spaces or memorial garden plots sold in the period (“PSR”) bears to the total of the number of spaces or plots sold in the period and the number of spaces or plots potentially available for sale at the end of that period (“PSR” + “PAR”).
708.Section 91(3) of ICTA excludes from “relevant capital expenditure” expenditure on buildings or structures destroyed “before the beginning of the first period to which [section 91(1)] applies” and a proportion of other expenditure “incurred before that time”.
709.Section 91(4) of ICTA excludes from the residue of any expenditure at the end of a period (“residual expenditure”) insurance money or other compensation received “after the beginning of the first period to which [section 91(1)] applies” in respect of buildings or structures sold or destroyed before the end of the relevant period.
710.Section 91 of ICTA is ultimately derived from section 22 of FA 1954 and the first period to which section 91 of ICTA applies is 1954-55. So subsection (2) of this section defines “residual expenditure” so as to exclude:
	ancillary capital expenditure on buildings destroyed before “the beginning of the first sale period”; and
	the sale proceeds of, or any compensation received in respect of, the sale or destruction of any asset representing ancillary capital expenditure sold or destroyed “after the beginning of the first sale period”.
711.The “first sale period” is defined in subsection (4) as the period in which land in the cemetery or memorial garden was first sold for the purposes of the trade or the basis period for 1954-55, if later.
712.Similarly, subsection (3) calculates “the excluded amount of any remaining old expenditure” to be deducted from residual expenditure under subsection (2)(b) by reference to the number of grave-spaces and plots sold before the beginning of the basis period for 1954-55 and the number potentially available for sale immediately before the beginning of that period.