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HMRC internal manual

Business Income Manual

Post-cessation receipts and expenses: receipts which are not post-cessation receipts: transfer of trading stock

S252 Income Tax (Trading and Other Income) Act 2005, S195 Corporation Tax Act 2009

Payment for the transfer of trading stock is not usually a post-cessation receipt

When a business ceases to trade, it may still have trading stock which needs to be sold.

If the trading stock is valued in accordance with the tax legislation and included in the profit and loss account in the final period of account, any amount received for the transfer of the stock is not a post-cessation receipt. This is because the value of the trading stock has already been included in calculating the taxable profits of the trade to cessation.

The rules on valuation of stock on cessation are found in Chap 12 Part 2 ITTOIA 2005 and Chap 11 Part 3 CTA 2009. For guidance on the application of these provisions, see BIM33450 onwards.

For these purposes, trading stock takes the definition in S174 ITTOIA 2005 and S163 CTA 2009 (see BIM33000 onwards).

Other receipts which are not post-cessation receipts

Other receipts which are specifically excluded from being post-cessation receipts are:

  • payments for transfer of work in progress (see BIM90060)
  • lump sums paid to personal representatives for copyright etc (see BIM90065)

These exclusions do not apply to companies subject to Corporation Tax.