Corporation Tax Act 2009 section 169

Cost to buyer of stock valued on sale basis of valuation

Section 169 establishes how the buyer of trading stock should determine the cost of that stock for the purpose of calculating their trading profits, where the stock has been valued on the sale basis when the seller's trade ceased.

• When trading stock is sold on cessation of a trade and valued on the "sale basis", the buyer must use that same valuation as the cost of the stock in their own profit calculations.
• The sale basis valuation is the amount determined under the cessation of trade rules, whether between connected or unconnected persons.
• This rule applies equally where the seller was liable to income tax rather than corporation tax — the income tax valuation is adopted as the buyer's cost for corporation tax purposes.
• The effect is to ensure symmetry: the value at which the seller brings the stock into their final profit calculation is the same value the buyer uses as their opening cost.