BIM55605 - Farming: herd basis: new right of election: compulsory slaughter

A fresh opportunity to elect for the herd basis outside the normal time limits is provided where the whole or a substantial part (see BIM55525) of a production herd is compulsorily slaughtered on account of disease and compensation is payable (see BIM55180 onwards).

• The time limit for making such an election is -
• in the case of a sole trader, twelve months after the fixed filing date for the first year of assessment for which the farming profits or losses are computed by reference to the period in which the compensation becomes due;
• in the case of a partnership, twelve months after the fixed filing date for the year of assessment in which the period of account during which the compensation becomes due ended;
• in the case of a company, two years from the end of the first accounting period for which the computation of farming profits or losses is, or would apart from the election be, affected by the compensation receipt.

In each case, the election takes effect from the period of account in which the compensation becomes due. Animals covered by the election (normally only mature production animals, see BIM55575) are treated as transferred from trading stock to the herd at the start of that period or, if later, when they become mature. The cost of those animals should be credited as a trading receipt (ICTA88/SCH5/PARA3 (3)). However, where exceptionally animals were valued at the previous accounting date at market value, being less than cost, no objection need be raised to the transfer being based on that value. The election, continues to have effect for all subsequent periods, unless the farmer ceases to keep a herd of the specified class for a period of at least five years (see BIM55630).