Corporation Tax Act 2009 section 164

Basis of valuation of trading stock

Section 164 sets out how trading stock belonging to a trade is to be valued when that trade ceases.

• When stock is sold to a UK trader (or someone intending to trade) who can deduct the cost for tax purposes, the valuation follows specific rules depending on whether the buyer is connected or unconnected with the seller
• Where the herd basis anti-avoidance rule applies, those sale-based valuation rules are overridden and the stock is instead valued at the open market price at the time of sale
• In all other cases — for example, where the stock is not sold to someone carrying on a trade, profession or vocation — the value is taken to be the open market price at the date of cessation
• The rules apply not only to sales to persons carrying on a trade but also to those carrying on a profession or vocation in the United Kingdom