Are app development costs an intangible asset?

How to treat app development costs in the accounts and for tax

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My client has decided to develop an elf on the shelf type app.  The company has incurred £5k in initial app development costs.

What is the best treatment for this?  My initial thoughts are to capitalise as an intangible asset, but having researched further there is mention of R&D claims so expensed.

Any advise on the accounts and tax treatment would be much appreciated.

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By paul.benny
06th Nov 2020 14:14

FRS102, section 18 deals with intangibles
From s18.4 "... the entity shall recognise an intangible asset as an asset if, and only if
it is probable that the expected future economic benefits that are attributable to
the asset will flow to the entity..."

Clearly the client believes their app will make them money, but is there any hard evidence to support this? At the very least, I would expect to see a plan of how this app will be monetised would sense check the number of purchases it would take to recoup the investment.

FRS105 doesn't permit capitalisation of any internally-generated intangibles.

I'll let others comment on tax.

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