BIM55430 - Farming: stock valuation: livestock subsidies: particular animals
Where a livestock subsidy is payable in respect of individually
identified live animals, its effect may need to be taken into
account when using the deemed cost method of valuation described in
Section 7 of BEN 19 (see
BIM55410). This was set out in an
article in Tax Bulletin, Issue 14 (December 1994).
If the subsidy has been taken into account in full in a
particular period then there is no effect on deemed cost
valuations. Where a receipt has not been taken into account in a
particular period but:
- the subsidy has been applied for, and
- that application had a material effect on the market value of the animal,
then the subsidy should be taken into account as a supplement to
the market value when deemed cost is computed.
Subsidies which have been applied for but not recognised as
income in the period concerned should also be taken into account in
arriving at net realisable value for stock valuation purposes.
An example of such a subsidy is the Beef Special Premium
which is payable in respect of live male cattle at certain ages.
Each animal has its own identity document which shows whether an
application for Premium has already been made. Once an application
is made in respect of a particular animal, its market value
therefore reduces.
