Assets may be held by traders as trading stock, fixed assets or, in the case of unincorporated businesses, as personal assets of the proprietors. Circumstances may arise where assets are taken into trading stock for future sale in the trade. Because amounts chargeable to income tax are outside the charge to capital gains tax (TCGA 1992, s. 37; see ¶518-600), it would be possible to avoid a tax liability on the disposal of an asset by appropriating it to trading stock, selling it as part of the trading activities where any profit might be reduced or eliminated by trading losses.
Want to read more?
This content requires a Croner-i Tax and Accounting subscription.