Income Tax (Trading and Other Income) Act 2005

173 Valuation of trading stock on cessation U.K.

(1) If a person permanently ceases to carry on a trade, in calculating the profits of the trade—

(a) trading stock belonging to the trade at the time of the cessation must be valued, and

(b) the value must be determined in accordance with sections 175 to 178 (bases of valuation).

(2) But no valuation of the stock is required under this Chapter if [F1 section 147(3) or (5) of TIOPA 2010] (provision not at arm's length) has effect in relation to any provision which—

(a) is made or imposed in relation to the stock, and

(b) has effect in connection with the cessation.

[F2 (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) If there is a change in the persons carrying on a trade, no valuation of the stock is required under this Chapter so long as a person carrying on the trade immediately before the change continues to carry it on after the change.

(4) If an individual carries on a trade alone, no valuation of the stock is required under this Chapter if the cessation is because of the individual's death.

Textual Amendments

F1 Words in s. 173(2) substituted (1.4.2010) (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 122 (with Sch. 9 paras. 1-9, 22)

F2 S. 173(2A)-(2C) inserted (with application in accordance with s. 41(3) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 41(2)