Sale of IPR and goodwill

Sale of IPR and goodwill

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A company started trading in 1998, so in theory it should be subject to the pre 2002 regime on sale of intangible assets.

Research and development expenditure has been capitalised as an intangible asset and amortised accordingly.

R and D tax credits have been claimed on that part of the capitalised expenditure that has been considered sufficiently innovative to qualify.

The company has now sold the goodwill and IPR on one of its products.  The net book value of the development expenditure relating to this product is £500k, and the sales proceeds £350k.  So in theory, there is a capital loss of £150k and everything in the garden is rosy.  

But this looks too good to be true.  The company has already had tax relief in the form of R and D tax credits on about half of the capitalised sum, so would the cost for capital gains purposes be considered to be the expenditure that did not qualify for R and D tax credits?

Also, although the company was trading before 2002, the R and D for the asset sold was performed and capitalised in subsequent years.  Does this take it out of the capital gains regime and make it a trading receipt?

Any views gratefully received - thank you!

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