Section 118 — Corporation Tax Act 2009: Acquisition of new herd begun within 5 years of sale

Acquisition of new herd begun within 5 years of sale 118 1 This section applies for the purpose of calculating the profits of the trade if—

a either all at once or over a period not longer than 12 months, the herd (“the old herd”) is sold, and b the farmer acquires or starts to acquire another production herd of the same class (“the new herd”) within 5 years of the sale.

2 Section 114 (replacement of animals in herd) applies as if a number of animals equal to—

a the number of animals in the old herd, or b if smaller, the number of animals in the new herd, had been sold from the old herd and replaced in that herd (but see section 119 (sale for reasons outside farmer's control)).

3 For the purposes of section 114, the sale proceeds of an animal that is treated as a result of subsection (2) above as if it had been—

a sold from the old herd, and b replaced in that herd by another animal (“the new animal”), are not brought into account as a receipt until the new animal is acquired.

4 If—

a the number of animals in the new herd is smaller than the number of animals in the old herd, and b the difference is not substantial, section 116 (sale of animals from herd) applies as if a number of animals equal to the difference had been sold from the old herd.

5 If the number of animals in the new herd is smaller than the number of animals in the old herd and the difference is substantial—

a section 117 (sale of whole or substantial part of herd where replacement not begun within 5 years), or b section 120 (sale of substantial part of herd where replacement begun within 5 years), applies as if a number of animals equal to the difference had been sold from the old herd.

6 If the number of animals in the new herd is larger than the number of animals in the old herd, section 113 (addition of animals to herd) applies as if a number of animals equal to the difference had been added to the old herd.

7 For the purposes of this section—

a if the difference between the number of animals in the new herd and the number of animals in the old herd is equal to 20% or more of the number of animals in the old herd, the difference is substantial, but b a lesser percentage than 20% is capable of being a substantial difference depending on the circumstances of the case concerned.