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

Acquisitions not made in the course of trade

Section 172E sets out how to value trading stock that has been acquired outside the normal course of trade, ensuring the cost used in the profit calculation reflects the open market value rather than any price actually paid.

• Where trading stock is acquired otherwise than in the course of trade, and section 172C does not apply, the stock must be valued at its open market price at the date of acquisition
• Whatever was actually paid or given in exchange for the stock is ignored for the purposes of calculating trading profits
• The cost of the stock is treated as having been incurred on the date the stock was acquired
• These rules are overridden by the transfer pricing provisions in section 172F where those provisions apply