16. Relief for stock-in-trade held at commencement of taxability

(1) An accountable person who makes a claim for a deduction under section 59(2) of the Act of an amount that he or she is entitled to deduct in accordance with section 86(1) of the Act is required—

(a) to keep detailed records of all stock-in-trade held at the commencement of the first taxable period for which he or she is deemed to be an accountable person (in this Regulation referred to as the “relevant day”), and

(b) to so keep those records under the headings set out in paragraph (2).

(2) The following are the headings for the purposes of paragraph (1):

(a) stocks supplied to the accountable person concerned by other accountable persons and in respect of which, if supplied immediately before the relevant day, tax would be chargeable on the full amount of the consideration at the rate specified in section 46(1)(a) of the Act,

(b) stocks supplied to the accountable person concerned by other accountable persons and in respect of which, if supplied immediately before the relevant day, tax would be chargeable on the full amount of the consideration at the rate specified in section 46(1)(c) of the Act,

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(ba) stocks supplied to the accountable person concerned by other accountable persons and in respect of which, if supplied immediately before the relevant day, tax would be chargeable on the full amount of the consideration at the rate specified in section 46(1)(ca) of the Act,

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(c) agricultural produce supplied by flat-rate farmers, and

(d) stocks, other than stocks referred to in subparagraph (c), in respect of which, if supplied immediately before the relevant day, tax would not be chargeable or would be chargeable at the zero rate.

(3) (a) The total amount of the deduction to which the accountable person concerned is entitled in respect of stocks specified in ^[2]>subparagraph (a) or (b) of paragraph (2)^<[2][2]>subparagraph (a), (b) or (ba) of paragraph (2)^<[2] is calculated by the formula:

(A - B)	×	C
		100 + C

where—

A is the value of stocks specified in ^[2]>subparagraph (a) or (b) of paragraph (2)^<[2][2]>subparagraph (a), (b) or (ba) of paragraph (2)^<[2], as the case may be, which is calculated on the basis of cost inclusive of tax, or market value, whichever is the lower,

B is the value of the stocks referred to in A in respect of which an invoice issued in accordance with Chapter 2 of Part 9 of the Act has been, or is likely to be, received on or after the relevant day, and

C is the percentage rate of tax, applicable on the day before the relevant day, as specified in section 46(1)(a) of the Act in respect of stocks referred to in paragraph (2)(a)^[3]>and in section 46(1)(c) of the Act in respect of stocks referred to in paragraph (2)(b).^<[3][3]>, in section 46(1)(c) of the Act in respect of stocks referred to in paragraph (2)(b) and in section 46(1)(ca) of the Act in respect of stocks referred to in paragraph (2)(ba).^<[3]

(b) The deduction to which the accountable person concerned is entitled in respect of stocks specified in paragraph (2)(c) is determined by the formula:

(D - E) × F

where—

D is the value of stocks specified in paragraph (2)(c) which is calculated on the basis of cost inclusive of tax, or market value, whichever is the lower,

E is the value of the stocks referred to in D in respect of which an invoice issued in accordance with Chapter 2 of Part 9 of the Act has been, or is likely to be, received on or after the relevant day, and

F is the percentage rate of flat-rate addition applicable on the day before the relevant day, specified in section 86(1) of the Act.

(4) A detailed record must be kept of the relief, claimed under this Regulation, which is included in a return made in accordance with section 76 or 77 of the Act.