BIM33475 | Stock: valuation on discontinuance of business: Decision Flow
From HM Revenue & Customs · Business Income Manual
Disposals of Stock - Decision Flow
Are you using the cash basis?
Yes - see guidance at either:
() for accounting periods ending on or before 5 April 2024
() for accounting periods ending on or after 6 April 2024
No - continue below
Is the stock sold or transferred for valuable consideration to a person who will carry on a trade in the UK and deduct the cost of the stock in computing their trading profits?
No - the value for the stock is the amount which would have been realised if sold in the open market ()
Yes - continue below
Is the stock subject to specific rules (professional work in progress or herd basis animals)?
Yes - apply specific legislation ()
No - continue below
Are the vendor and purchaser connected?
The definition for connected persons is here:
No - or apply. The amount realised is the closing value for the vendor and the opening value for the purchaser ()
Yes - continue below
Is the consideration received the arm’s length price?
Yes - arm's length price is used as closing value for vendor and opening value for purchaser ()
No - continue below
Is the consideration received greater than the arm’s length price?
Yes - arm’s length price is used as closing value for vendor and opening value for purchaser ()
No - continue below
Is the arm’s length price more than both the acquisition value and the price received?
Parties may elect to substitute the greater of value received and acquisition value (). Otherwise use the arm’s length value.