Taxes Consolidation Act 1997 section 90

Valuation of work in progress at discontinuance of profession

Section 90 sets out the rules for valuing work in progress (WIP) when a profession is discontinued, and gives the professional person an election to defer the taxing of any profit element in that WIP until amounts are actually received.

• If WIP is transferred to another professional who can deduct its cost, the value is the price actually paid; otherwise, WIP is valued at the arm's length open market price.
• The professional may elect, in writing to the inspector within 24 months of cessation, to exclude the profit element of WIP from the final period's computation and instead have any excess of transfer proceeds over cost taxed as a post-cessation receipt under section 91.
• The section applies equally to a deemed discontinuance (for example, a change in the basis of assessment) but does not apply where a sole practitioner's profession ends by reason of death.
• WIP includes any partly or fully completed professional services that would have been billed on completion, together with any articles produced and materials used in performing those services, and any associated benefits and rights.