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HMRC internal manual

Business Income Manual

From
HM Revenue & Customs
Updated
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Cash basis: receipts: value of trading stock on cessation of trade, value of work in progress on cessation of profession or vocation

S97A ITTOIA 2005, S97B ITTOIA 2005

If a person who has made a cash basis election for a tax year permanently ceases carrying on a trade in that tax year, the value of any trading stock at the time of cessation is brought into account as a receipt.

The value is to be determined on a basis that is just and reasonable in all the circumstances. For example, this might be the cost or net realisable value of the stock at the date of cessation.

There is no requirement to bring a receipt into account where there is a change in the persons carrying on a trade and a person carrying it on immediately before the change continues to carry it on after the change (for example, where there is a change in the partners in a partnership).

For a person carrying on a profession or vocation, the value of any work in progress at the time of cessation is brought into account in the same way as trading stock for a trader.