Corporation Tax Act 2009 section 162

Valuation of trading stock on cessation

Section 162 requires that when a company permanently ceases trading, its trading stock must be valued for the purpose of calculating the final trading profits, and sets out the circumstances in which this valuation requirement is disapplied.

• When a company permanently ceases a trade, any trading stock on hand at cessation must be valued using the specific valuation rules in sections 164 to 167 of the Act, and the resulting value is brought into account in calculating the trade's profits.
• No valuation under this Chapter is needed if the transfer pricing rules in section 147(3) or (5) of TIOPA 2010 already apply to the stock in connection with the cessation — but if the market value of the stock exceeds the amount brought in under those transfer pricing rules, the excess must also be included in the trade's profits.
• Where a trade is carried on in partnership and there is a change in the partners, no cessation stock valuation is required provided that at least one company that was a partner immediately before the change continues as a partner afterwards.
• A "partnership change" for these purposes means any change in the persons carrying on the trade where the trade is carried on in partnership either immediately before or immediately after the change, or at both times.