Corporation Tax Act 2009 section 120

Replacement of part sold begun within 5 years of sale

Section 120 sets out the rules that apply when a farmer sells a substantial part of a herd and begins replacing the animals within five years of the sale.

• Where a substantial part of a herd is sold (either all at once or over up to 12 months) and replacement animals are acquired or begin to be acquired within 5 years, the replacement rules in section 114 apply to the animals that are actually replaced
• The sale proceeds of each animal sold are not recognised as a taxable receipt until its replacement animal is actually acquired
• If some of the animals sold are not ultimately replaced, any profit on their sale is not taxable and any loss on their sale is not deductible
• Special rules apply where the sale was for reasons outside the farmer's control, as set out in section 121