BIM33310 | Stock: trading transactions in: ways of disposing of or acquiring stock

Stock can give rise to a profit or loss by:

• sale

• appropriations to and from stock

• insurance claim for partial or total loss

• barter transactions

• use in the construction of a fixed asset

• write off of all or part due to obsolescence or slow moving, see stock valuation (BIM33100 onwards)

• fall in net realisable value, see stock valuation (BIM33100 onwards)

• theft or other loss

Disposals of Stock – Decision Guide

The tax value at which stock is disposed of, or acquired, depends on whether the disposal is in the course of the trade or otherwise. There are also some statutory rules covering specific situations Follow these steps to determine the correct route.

Step 1 - Has the vendor’s trade discontinued?

• Yes - apply special rules under S173–S186 ITTOIA 2005 and S162–S171 CTA 2009, see BIM33450

• No - go to Step 2

Step 2 - Is the disposal in the course of the trade?

• Yes - go to Step 3

• No - apply general rules, see BIM33600

Examples include:

• appropriation to and from stock

• own goods BIM33630

• insurance claim

• construct fixed asset

• stock given away

• theft

Step 3 - Is the disposal a barter transaction?

• Yes - determine the value of what is received

• No - apply rules for stock written off or fallen in value, see BIM33140

Examples include:

• stock given away

• theft

• ordinary sale

Special circumstances guidance

If the transaction is in special circumstances or is not a trading transaction you may find guidance at: