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Under the cash basis deductions are allowed for some types of capital expenditure, (see B6.202D), so there are also specific rules which tax any receipts which relate to the disposal of those capital items.

Where a person receives a refund of capital expenditure which relates to an asset or receives disposal proceeds at any time when the person is calculating the profits of a property business under the cash basis, the refund of capital or disposal proceeds, as the case may be, are brought into account as a receipt in calculating the profit of the business if a deduction has previously been taken for an amount of capital expenditure on that asset ¹.

The deduction must have been made under the cash basis rules when the profit was calculated under the cash basis or under GAAP (B6.202B) if allowable under the cash basis, this would include incidental costs obtaining