Meaning of trade: exceptions and alternatives: insurance receipts
Operations, such as the insurance of stock-in-trade, which are ancillary to trading operations and not of a capital nature, are themselves to be treated for tax purposes as trading operations.
In Green v J Gliksten & Son Ltd  14TC364 a company lost by fire the timber which was its stock-in-trade. The stock had been insured and the company received the replacement value as an insurance recovery. This recovery exceeded the book value of the stock and the company sought to exclude the excess from its trading profits. Lord Hanworth, MR noted at page 378:
‘Messrs Gliksten & Son Ltd were traders in timber; it was part of their business to buy and sell timber, and it was a part of their business - ancillary, perhaps - to take steps to insure their trade from the mischances which can be insured against, such as the perils of the sea and perils of the land… As Mr. Justice Rowlatt says: “It seems to me that the Respondents must account for this timber that has been destroyed by fire; they have received the money from the insurance company in place of it … the fact is that the Respondents’ business is to buy, hold and sell timber, and it is part of their business to insure timber while they have it, in order that if the timber is destroyed they may have the insurance money instead of the timber and, in my judgement, they must treat that money in the same way as they would have treated the timber, namely, as an item in their trading account.” Those are the words of Mr. Justice Rowlatt. It appears to me that they are right, and therefore that the appeal fails.’