Part 2Trading income
Chapter 8Trade profits: herd basis rules
The herd basis rules
122Replacement of part sold begun within 5 years of sale
1
This section applies for the purpose of calculating the profits of the trade if—
a
either all at once or over a period not longer than 12 months, a substantial part of the herd is sold, and
b
the farmer acquires or starts to acquire animals to replace the part sold within 5 years of the sale.
2
Section 116 (replacement of animals in herd) applies so far as the animals included in the part sold are replaced (but see section 123 (sale for reasons outside farmer's control)).
3
The sale proceeds of an animal included in the part sold are not brought into account as a receipt until the animal that replaces it in the herd is acquired.
4
If some of the animals included in the part sold are not replaced—
a
a profit arising from their sale is not brought into account as a receipt, and
b
no deduction is allowed for a loss arising from their sale.