Policy paper

Statement of Practice A32

Published 31 March 1978

The case of Sharkey v Wernher (1955) 36 TC 275, establishes the principle that where a trader takes stock from his business for private use or enjoyment or disposes of stock otherwise than by sale in the normal course of trade, the transfer should be dealt with for taxation purposes as if it were a sale at market value.

Inspectors have been authorised to take a reasonably broad view in applying this principle.

The decision is not considered to apply to:

  • (a) services rendered to the trader personally or to his household which should be dealt with in accordance with ICTA 1988 s 74(1)(b)
  • (b) the value of meals provided for proprietors of hotels, boarding houses, restaurants etc and members of their families which should also be dealt with on the basis that ICTA 1988 s 74(1)(b) applies
  • (c) expenditure incurred by a trader on the construction of an asset which is to be used as a fixed asset in the trade