Section 120 | Acquisition of new herd begun within 5 years of sale

(1)This section applies for the purpose of calculating the profits of the trade if—

(a)either all at once or over a period not longer than 12 months, the herd (“the old herd”) is sold, and

(b)the farmer acquires or starts to acquire another production herd of the same class (“the new herd”) within 5 years of the sale.

(2)Section 116 (replacement of animals in herd) applies as if a number of animals equal to—

(a)the number of animals in the old herd, or

(b)if smaller, the number of animals in the new herd,

had been sold from the old herd and replaced in that herd (but see section 121 (sale for reasons outside farmer's control)).

(3)For the purposes of section 116, the sale proceeds of an animal that is treated as a result of subsection (2) above as if it had been—

(a)sold from the old herd, and

(b)replaced in that herd by another animal (“the new animal”),

are not brought into account as a receipt until the new animal is acquired.

(4)If—

(a)the number of animals in the new herd is smaller than the number of animals in the old herd, and

(b)the difference is not substantial,

section 118 (sale of animals from herd) applies as if a number of animals equal to the difference had been sold from the old herd.

(5)If the number of animals in the new herd is smaller than the number of animals in the old herd and the difference is substantial—

(a)section 119 (sale of whole or substantial part of herd where replacement not begun within 5 years), or

(b)section 122 (sale of substantial part of herd where replacement begun within 5 years),

applies as if a number of animals equal to the difference had been sold from the old herd.

(6)If the number of animals in the new herd is larger than the number of animals in the old herd, section 115 (addition of animals to herd) applies as if a number of animals equal to the difference had been added to the old herd.

(7)For the purposes of this section—

(a)if the difference between the number of animals in the new herd and the number of animals in the old herd is equal to 20% or more of the number of animals in the old herd, the difference is substantial, but

(b)a lesser percentage than 20% is capable of being a substantial difference depending on the circumstances of the case concerned.