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B2.205 Non-trading transactions in stock

If an item of trading stock is disposed of otherwise than in the course of the trade, the amount to be brought into account as a trade receipt is the amount representing the market value of the item at the date of its disposal¹.

This rule does not apply where profits are calculated on the cash basis for unincorporated businesses (see B2.111 and B2.112)². Instead, a just and reasonable adjustment should be made to reflect the uncommercial transaction (see B2.207A). So, for example, the cost of any such goods might be disallowed as an expense³.

The rule also does not apply to services rendered to the trader personally or to their household, or the value of meals provided for proprietors of hotels, boarding houses, restaurants etc and members of their families both of which should be dealt with under the wholly and exclusively rule, (see B2.315). In addition, expenditure incurred on the construction of an asset that is intended from the outset to be used as a fixed