How should damaged, obsolete or missing stock be recorded?

Check the quantity, condition and recoverable value, then record a supported adjustment under the accounting basis used. Stock should not stay at its original value simply because it was expensive to buy. Missing items also need investigation rather than an unexplained write-off.

These answers provide general information, not advice tailored to your circumstances. Rules can change and exceptions may apply — speak to the CASS team before making a tax, accounting or financial decision.

Establish what happened

Carry out a stock check and distinguish damage, obsolescence, counting errors, theft and goods used privately. Each needs accurate records and may require different follow-up.

Assess the remaining value

Under normal accrual accounting, stock is generally valued at the lower of cost and expected selling proceeds after relevant completion and selling costs. Slow-moving stock is not automatically worthless.

Keep supporting evidence

Retain count sheets, photographs, disposal records and the reason for any reduction. A standard percentage write-down needs justification rather than being applied simply to reduce profit.

Check the wider implications

Tell CASS about material losses. Insurance claims, private use and VAT may need separate review. Cash-basis businesses can have different accounting and tax treatment.