Compensation: assets damaged/destroyed: `replacement'
The word ‘replacement’ can be interpreted reasonably. A claim in respect of a replacement asset which is of similar function and type to the original asset is within TCGA92/S23(4).
Mrs P acquired an asset in July 1988 for £20,000 and insured it for ‘replacement value’. The asset was destroyed in 1990. In September 1990, she received £25,000 under the insurance policy. The salvaged material had a residual scrap value of £500. The scrap was not taken by the insurance company. The costs incurred in settling the claim were £400. Mrs P immediately acquired a replacement asset for £27,500 and claims under TCGA92/S23(4).
|Cost of original asset||20,000|
|Indexation allowance 20,000 x|
|Expenses of disposal|
|Cost of replacement asset|
|Deemed cost of replacement asset|