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

Trading stock supplied by trader

Section 172C deals with how to value items that a trader already owns when those items are transferred into the trade as trading stock, requiring open market value to be used as the cost.

• When something a trader owns personally (but which is not already trading stock) becomes trading stock of their trade, special valuation rules apply
• The cost of that stock, for the purpose of calculating trading profits, is taken to be its open market value at the time it became trading stock
• Any amount actually paid or given for the item is ignored in the profit calculation
• The cost is treated as incurred on the date the item became trading stock of the trade