Income Tax (Trading and Other Income) Act 2005 section 97A

Cash basis: value of trading stock on cessation of trade

Section 97A requires that when a trade using the cash basis permanently ceases, the value of any trading stock on hand at cessation must be brought into account as a trading receipt.

• When a cash basis trade permanently ceases, any remaining trading stock must be treated as a receipt in calculating the trade's profits for that tax year
• The value of the stock must be determined on a basis that is just and reasonable in all the circumstances
• Where there is a change in the persons carrying on the trade, this rule does not apply if at least one person who carried on the trade before the change continues to do so afterwards
• This section applies only to trades and does not apply to professions or vocations