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Herd basis and death

A farmer who had a herd basis election in place for many years, died. What value is placed on the capital herd for income tax purposes at the date of death? I have my own view but would like other opinions.

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09th Nov 2017 16:34

What's your view?

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By Ruddles
09th Nov 2017 16:57

I have my own view, too.

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09th Nov 2017 18:41

I don't have a view but I did enjoy seeing "herd basis". Takes me back to exam studies.

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By DJKL
to Red Leader
10th Nov 2017 16:38

And raises the question, in this day and age when certain groups may perceive they have not been granted equality under the law, why "Herd Basis" is considered a suitable term to use; this is total discrimination against sheep and other livestock.

Here is an earlier thread touching on the issue.

https://www.accountingweb.co.uk/any-answers/valuation-of-livestock-on-de...

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to Red Leader
10th Nov 2017 19:31

Red Leader wrote:

I don't have a view but I did enjoy seeing "herd basis". Takes me back to exam studies.

How old are you? ;)

Herd basis wasn't in any of my accountancy, ATT or CTA exams - and I qualified not so recently - though it was this millenium

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By DJKL
to AnnAccountant
10th Nov 2017 19:49

Checking my very old Tiley Revenue Law, 1981, it refers to the Herd Basis and its implications, the definition of a "Production Herd" having a footnote reference to TA1970, Sch6,para 8(3)

Accordingly it has existed for a very long time and may well continue until the cows come home.

I do not recall learning it in the mid 1980s but do recall dealing with it in the late 1980s re a client, though having only worked in Edinburgh and Glasgow we did not have that many farms as clients, in fact I think I have only dealt with four farms in my entire professional life.

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By dctynet
10th Nov 2017 10:04

My view is that no one seems to know.

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By Ruddles
to dctynet
10th Nov 2017 10:16

If that is your view, then you are wrong.

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10th Nov 2017 10:40

I don't understand the question. Why is there a need to value the herd at death?

I thought you were just ascribing a "cost" when you sell animals. So that you realise a profit of SP less "cost" at that point?

Presumably any animals still on hand at the permanent cessation of the trade, are regarded as not having been sold?

Perhaps I'm being a bit thick?

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By dctynet
to Portia Nina Levin
13th Nov 2017 10:28

I was asked for an opinion by a friend whose father had died intestate.

I would have thought that there would have been a deemed disposal of the herd at the date of death, and the value would be that of the Capital Herd, not market value as has been actually been included in the accounts prepared by the deceased's accountants. Or am I missing something here?

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to dctynet
13th Nov 2017 11:01

Why do you think that? There is no provision within the herd basis provisions for such an adjustment.

As is noted in the other thread that has been linked to in one of the posts, were the herd treated as stock (as they would be without the herd basis election), ITTOIA 2005,s 173(4) is unequivocal that there would also be no such adjustment.

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10th Nov 2017 12:47

My opinion is that you need to give your view to get an opinion on your view!

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