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

Cash basis: value of work in progress on cessation of profession or vocation

Section 97B requires that when a profession or vocation using the cash basis permanently ceases, the value of any work in progress at cessation must be treated as taxable income.

• When a person permanently stops carrying on a profession or vocation and uses the cash basis, any work in progress at the date of cessation must be included as a taxable receipt in that final tax year
• The value placed on work in progress 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 a profession but at least one person continues after the change, the work in progress does not need to be brought into account as a receipt
• Work in progress carries the same meaning as defined in section 183 of the Act, which covers the valuation of stock and work in progress on cessation of a trade