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HMRC internal manual

Business Income Manual

Farming: herd basis: continuing effect of an election

S124(5) Income Tax (Trading and Other Income) Act 2005, S122(5) Corporation Tax Act 2009

An election for the herd basis is irrevocable and will continue to apply indefinitely to all production herds of the specified class (see BIM55590) kept by the individual, partnership or company who made it, unless that individual, partnership or company ceases to keep a herd of the specified class for a period of at least five years. But see BIM55610 regarding partnership changes.

For example, the effect of an election by a particular farmer will continue notwithstanding that he sells his farm and sets up again elsewhere, or gives up farming for two or three years. The question whether the person who takes over the farm has any right of election will depend entirely on the circumstances of his case.

A person who has ceased for a period of at least five years to keep a production herd of a particular class will acquire a fresh right of election if he commences thereafter to keep another herd of that class.

The election will also be invalidated if the production herd ceases to be kept for the purposes specified in the election, see BIM55615.