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The correct tax approach to various categories of dairy cattle.
My client is a mixed farm which has recently sold all of its dairy cattle. The mature cows and bulls are accounted for on the herd basis under which the gain on disposal will be subject to neither income tax nor capital gains tax.
The auctioneer has identified ‘A Lots’ being calves ‘at foot’ which are still with their mothers. So we have an identifiable disposal value on these calves and can calculate the profit made. My understanding is that only cows that have calved (or bulls first used for breeding purposes) are covered under the herd basis and that the profits on the young calves (along with those of the older calves and heifers) are subject to income tax as usual.
However the client is adamant that HMRC accepts that calves ‘at foot’ are covered within the herd basis that the profit is not taxable ...
