Income Tax (Trading and Other Income) Act 2005 section 172B

Trading stock appropriated by trader

Section 172B deals with the tax treatment when a trader takes trading stock out of the business for a non-trading purpose, requiring an open market value receipt to be recognised in the trade profits.

• When a trader appropriates trading stock for any purpose other than the trade, a deemed sale at open market value must be recognised
• The open market value at the date of appropriation is brought into account as a trading receipt
• Any amount actually received for the stock is disregarded for the purpose of calculating trade profits
• The deemed receipt is treated as arising on the date the stock is appropriated