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HMRC internal manual

Business Income Manual

Measuring the profits (particular trades): land: trading transactions: timeshare schemes: trading profit computation

Where it is accepted that the grant of the timeshares gives rise to trading receipts you should bear the following computational points in mind:

  • The vendor retains an interest in the land and this should be valued at each accounting date in accordance with the principle explained at BIM51590. Where the timeshare agreement is for periods in excess of 50 years that value may be purely nominal and the valuation question may not be worth pursuit. However, where timeshares are for shorter periods, say 10 or 15 years, the point may be material since the interest retained by the vendor is likely to be fairly valuable.
  • Where some of the units remain unsold at an accounting date they should be valued, on normal principles, at the lower of cost or net realisable value. If you cannot reach agreement on the valuation of unsold ‘weeks’ - particularly those falling in the off peak unpopular periods, which may be valued by the trader at less than cost, please submit the file to CTISA with a brief report.