Part 2

Trading income
Chapter 6

Trade profits: receipts

Cash basis: value of stock and work in progress on cessation

Cash basis: value of trading stock on cessation of trade
97A
1
This section applies if—
a
a person permanently ceases to carry on a trade in a tax year, and
b
the cash basis applies
in relation to the trade for the tax year.
2
The value of any trading stock belonging to the trade at the time of the cessation is brought into account as a receipt in calculating the profits of the trade for the tax year.
3
The value is to be determined on a basis that is just and reasonable in all the circumstances.
4
If there is a change in the persons carrying on a trade, subsection (2) does not apply in relation to the trade so long as a person carrying on the trade immediately before the change continues to carry it on after the change.
5
In this section “
trading stock
” has the same meaning as in Chapter 12 (see section 174).
6
This section does not apply to professions or vocations.
Ss. 97A, 97B and cross-heading inserted (with effect in accordance with Sch. 4 paras. 56, 57 of the amending Act) by Finance Act 2013 (c. 29), Sch. 4 para. 21
Words in s. 97A(1)(b) substituted (6.4.2024 for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 10 paras. 23, 47 (with Sch. 10 paras. 48-50)