Corporation Tax Act 2009 section 119

Section 118: sale for reasons outside farmer's control

Section 119 limits the taxable trade receipt when a farmer who sold an entire herd for reasons beyond their control acquires a replacement herd within five years, and a replacement animal is of worse quality than the animal it replaces.

• Where a farmer was compelled to sell the old herd for reasons wholly outside their control, special relief may apply to replacement animals of worse quality
• The taxable receipt on each replacement animal of worse quality is capped at the "equivalent amount" for that new animal, rather than the full proceeds of the old animal it replaces
• If the replacement animal came from the farmer's own trading stock, the equivalent amount is either the cost of breeding and rearing to maturity (home-bred) or the purchase price plus any rearing costs to maturity (bought-in)
• If the replacement animal was not part of the farmer's trading stock before joining the herd, the equivalent amount is simply the cost of acquiring the new animal