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HMRC internal manual

Business Income Manual

Farming: stock valuation: limits to use of deemed cost method

Helpsheet 232

The deemed cost method of valuation described in Helpsheet 232 (see BIM55410) should not be used where it would not result in a reasonable estimate of cost, for example in the case of pedigree stock.

Helpsheet 232 authorises use of the method only as regards cattle, sheep, pigs and harvested crops. Other species of farm livestock are not covered. If, in a particular case, the use of a similar method to arrive at a reasonable estimate of cost for another species of farm livestock is accepted, it should be made clear that agreement to the use of the method for that species is for that case only and should not be treated as creating a precedent for other cases. The method is not appropriate to the valuation of thoroughbred horses (see BIM55701).