Part 2Trading income

Chapter 12Trade profits: valuation of stock and work in progress on cessation of trade

Valuation of trading stock

176Sale basis of valuation: sale to unconnected person

(1)

The value of trading stock is determined in accordance with this section if—

(a)

it is sold to a person who carries on, or intends to carry on, a tradeF1, profession or vocation in the United Kingdom and is entitled to deduct the cost of the stock as an expense in calculating the profits of that tradeF1, profession or vocation for income or corporation tax purposes, and

(b)

the buyer is not connected with the seller.

(2)

The value is taken to be the amount in fact realised on the sale.

(3)

If the stock is sold together with other assets, so much of the amount realised on the sale as, on a just and reasonable apportionment, is properly attributable to each asset is treated as the amount realised on the sale of that asset.