Taxes Consolidation Act 1997 section 89

Valuation of trading stock at discontinuance of trade

Section 89 sets out rules for valuing trading stock when a trade is discontinued, including how to determine the closing stock value depending on whether the stock is sold to a connected or unconnected party.

• Trading stock at discontinuance is valued at the actual sale price if sold to an unconnected trader, or at an arm's length price if sold to a connected trader.
• Stock not sold to another trader is valued at its open market value on the date the trade ceases.
• Connected parties may jointly elect to value stock at the higher of its acquisition value or the actual price received, where the arm's length price exceeds both.
• The value used for the discontinued trade's closing stock is also treated as the purchase cost of that stock for the buying trader.