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HMRC internal manual

Business Income Manual

Farming: herd basis: identification of animals disposed of

S118 Income Tax (Trading and Other Income) Act 2005, S116 Corporation Tax Act 2009

The identification of animals leaving the herd without replacement is essentially a question of fact. Where there have been recent additions to the herd, it should be possible to establish as a matter of fact whether the same animals are among the animals now disposed of. But, where the animals disposed of entered the herd as replacements, identification may be more difficult, particularly with larger herds. In practice, where the herd basis records kept by the taxpayer are not sufficiently detailed to allow particular animals to be identified, `first in, first out’ may be accepted as a reasonable basis in the absence of evidence pointing to some other alternative being preferable.