FRS 105 - intangible development recognition


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Hi all,

Client has website development costs (new website rather than maintenance). Tradditionally I would book this to intangible assets but I keep reading different interpretations of the following to be internally generated intangibles can't be recognised.

A micro-entity shall recognise the expenditure on the following items as an expense and shall not recognise such expenditure as intangible assets (the list is not exhaustive):

(a) Expenditure on research and development activities

For Corporation tax, assume it continues to be treated the same as FRS 105 per HMRC's website?

Replies (2)

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By Harrison88
17th Sep 2018 10:01

Just to add to this, it looks like where staff generate the website internally themselves, their costs would be treated as revenue in nature. However, HMRC treat it as capital.

The cost of a web site is analogous to that of a shop window. The cost of constructing the window is capital; the cost of changing the display from time to time is revenue.

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Replying to Harrison88:
By Anne Fairpo
17th Sep 2018 11:44

For tax, it's a question of purpose/functionality - if the site is intended to generate sales then, as you note, the costs of initial development will generally be capital (and potentially within scope of capital allowances - which would take the costs outside the scope of the corporate intangibles regime)

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