"So we have more legislation that is just a nuisance and which apparently serves no useful purpose: legislation that was not consulted on or discussed..."

The Finance Bill includes proposals (Schedule 15) which have already been through Parliament and which would write the principles of Sharkey v Wernher into tax statute. This is presumably because HMRC has become increasingly concerned that the decision in that case (or HMRC's traditional interpretation of it) might be rejected by the courts now because it conflicts with accounting practice, and rumour has it that there was indeed a case pending.

It is remiss of me not to have picked this up before (there are after all only 46 schedules to this Bill) but I am amazed there has not been more of an outcry.

There will be new sections for ITTOIA, and the one that matters is S.172B

(1) This section applies if trading stock of a person's trade is appropriated by the person for any other purpose.
(2) In calculating the profits of the trade —
(a) the amount which the stock appropriated would have realised if sold in the open market at the time of the appropriation is brought into account as a receipt, and
(b) the value of anything in fact received for it is left out of account.

Trading stock is defined

(1) In this Chapter "trading stock", in relation to a trade, means anything (whether land or other property) —
(a) which is sold in the ordinary course of trade, or
(b) which would be so sold if it were mature or its manufacture, preparation or construction were complete.
(2) It does not include —
(a) materials used in the manufacture, preparation or construction of any such thing,
(b) any services performed in the ordinary course of the trade, or
(c) any article produced, or any material used, in the performance of any such services.

So why did HMRC not stop and think "do we need this?". It is of course in conflict with the basic principle that no man can make a profit out of himself. The small business person who takes a tin of beans for his tea has not in any sense made a profit on the transaction: what he has gained is what he paid for the stock, and that is the amount that should be taxable.

There is endless room for conflict. Do I need a higher figure if I take an already fried fish from the customer shelf than if I fry it up for myself? Did I really mark this down as drawings when I went to the cash and carry?

The principle of course is that you follow accounting practice except where there is specific legislation to overrule it, and now there is. But why? In most cases (baked beans again) the principle is just a nuisance, requiring some kind of research or policy to find a figure for market value. There are some cases (mostly for builders and property developers) where there can be significant figures – but in these there can also be significant unfairness. The small builder who puts up a house that he intends to sell and who then finds no interest in the market and so occupies it himself must pay tax on what might be a very large profit that he has not seen. But – unless I am much mistaken – the actual overall gain for HMRC is likely to be very small.

So we have more legislation that is just a nuisance and which apparently serves no useful purpose: legislation that was not consulted on or discussed. Sure, it maintains the status quo as far as HMRC is concerned: but did nobody think whether in this case the status quo ought to be maintained?