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HMRC internal manual

Business Income Manual

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Measuring the profits (particular trades): Mineral extraction: Shingler v P Williams & Sons [1933] 17TC574

The question was whether a payment for the right to get and carry away slag from the partnership’s land was a receipt of a trade (see BIM62020).

The partnership had originally traded as iron and coal masters. However, that trade had ceased several years before. Trustees for the partnership managed a number of properties that had been retained. One of these properties had been used to deposit waste from furnace and mining operations, including those of the partnership. The slag, at the time deposited, was worthless and had reduced the value of the land. At a later date a use was found for the slag (road construction) and it became a valuable asset. A company was granted an exclusive right to get and carry away the slag for seven years in return for payments determined by a number of factors. These included the nature of the material, the quantity removed and, in some instances, the eventual sale proceeds and cost of removal.

It was held that the transactions did not amount to a trade.

See PIM1117 for the charge to tax on rent receivable in connection with a UK mining or other concern listed in S12(4) Income Tax (Trading and Other Income) Act 2005 or S39(4) Corporation Tax Act 2009.