Income Tax (Trading and Other Income) Act 2005 section 180

Cost to buyer of stock valued on sale basis of valuation

Section 180 establishes how the buyer of trading stock should determine its cost when the stock has been valued on a sale basis following the cessation of the seller's trade.

• When a trade ceases and trading stock is sold, the value placed on that stock for the seller also becomes the cost figure used by the buyer
• This applies whether the sale basis valuation arises under income tax rules (sections 175 to 178 of ITTOIA 2005) or corporation tax rules (sections 164 to 167 of CTA 2009)
• The rule ensures consistency: the same value is used in computing both the seller's cessation profits and the buyer's ongoing trade profits
• The provision covers cross-tax situations, such as where a sole trader sells stock to a company, or vice versa