INTM435020 - Transfer pricing: tax cases - Sharkey v Wernher (36TC275)

This 1955 case, which concerned the value at which horses should be transferred from a stud farm (a trade) to personal use as racehorses (not a trade), was the leading case that confirmed the principle in Watson Brothers v Hornby (see INTM435010)

Although the value of unraced animals was difficult to quantify, it might be expected that it would be very much greater than the cost of breeding them. The House of Lords decided that it was this larger amount which should be brought into the stud farm's accounts in respect of the transfer.