BIM55560 - Farming: herd basis: tax avoidance: transfers not at market price

ICTA88/SCH5/PARA5 contains provisions safe-guarding the Revenue against avoidance of tax by transfers of production herds, or of animals forming part of such herds, otherwise than by sale at the market price. The broad effect of the provisions, to which reference should be made in any case of doubt as to whether they apply, is to require that the transfer is to be treated for taxation purposes as though made at market price if-

• one of the parties to the transfer is a body of persons, including a partnership, under the control of the other (or both are bodies of persons under the control of a third person)

or

• it appears that the main benefit, or one of the main benefits, which might have been expected from the transaction was a benefit derived from the effect, or the cessation of the effect, of an election, or the acquisition of a fresh right of election.

The provisions apply whether or not any of the parties had, at the time, already made an election. The expression `control' has the same meaning as in ICTA88/S840.