Income Tax (Trading and Other Income) Act 2005 section 125

Five year gap in which no production herd kept

Section 125 deals with the consequences when a farmer who has made a herd basis election stops keeping a production herd of that class for five years or more and then starts again.

• The section applies where a farmer previously kept a production herd of a particular class but ceased keeping herds of that class entirely for at least five years.
• If the farmer begins keeping a production herd of the same class again after the five-year gap, the period of account in which the new herd is started is treated as the very first period of account for that class of herd.
• Any herd basis election the farmer had previously made for that class of production herd ceases to have effect — the farmer is effectively starting from scratch.
• If the farmer wishes to use the herd basis for the new herd, a fresh election would need to be made, as the original election no longer applies.