My client is developing software with the intent to sell licenses. To date he has spent money primarily on external consultants in order to develop the software which I would considered a software development asset.
However FRS105 below states that all Research and Development should be expensed.
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
This seems quite broad brush and I am not sure whether that refers to only internally generated development, so wanted to see if anyone else had any experience of this?
Additionally, does the tax treatment follow the accounting treatment in this case if it did need to be expensed?