PART 4Income tax, corporation tax and capital gains tax

Income tax and corporation tax

41Valuation of trading stock on cessation

1

In section 162 of CTA 2009 (valuation of trading stock on cessation), after subsection (2) (transfer pricing rules to take precedence) insert—

2A

Subsection (2B) applies if—

a

by virtue of subsection (2), no valuation of the stock under this Chapter is required, and

b

the market value of the stock is greater than the Part 4 TIOPA amount.

2B

An amount equal to the market value of the stock less the Part 4 TIOPA amount is to be brought into account in calculating the profits of the trade (in addition to the Part 4 TIOPA amount).

2C

In subsections (2A) and (2B)—

  • “market value”, in relation to stock, is the value the stock would have been determined to have if it had been valued in accordance with sections 164 to 167, and

  • “Part 4 TIOPA amount” is the amount which, following the application of Part 4 of TIOPA 2010 in relation to the provision referred to in subsection (2), is brought into account in respect of that provision in calculating the profits of the trade.

2

In section 173 of ITTOIA 2005 (valuation of trading stock on cessation), after subsection (2) (transfer pricing rules to take precedence) insert—

2A

Subsection (2B) applies if—

a

by virtue of subsection (2), no valuation of the stock under this Chapter is required, and

b

the market value of the stock is greater than the Part 4 TIOPA amount.

2B

An amount equal to the market value of the stock less the Part 4 TIOPA amount is to be brought into account in calculating the profits of the trade (in addition to the Part 4 TIOPA amount).

2C

In subsections (2A) and (2B)—

  • “market value”, in relation to stock, is the value the stock would have been determined to have if it had been valued in accordance with sections 175 to 178, and

  • “Part 4 TIOPA amount” is the amount which, following the application of Part 4 of TIOPA 2010 in relation to the provision referred to in subsection (2), is brought into account in respect of that provision in calculating the profits of the trade.

3

The amendments made by this section apply in relation to a cessation of trade on or after 8 July 2015.