Software Development and S815

Election under S815

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A new client engaged an external consultant to develop a new software and paid around £150K to do that. We can demonstrate that the development costs can be recognised as an intangible asset and will amortise it over its useful economic life.

From BIM3501 am I right to think that the tax treatment will follow accounting treatment (tax deduction for amortisation amount) and no AIA will be available unless an election under S815 is made?

Can someone tell me how to make this election as I’ve never done this before? I can’t seem to find a form for that. Do we write a letter to HMRC? Or do we just disclose it on CT600? Thank you

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By Ruddles
18th Apr 2024 15:06

There is no prescribed form. For smaller amounts I would just put a footnote on the appropriate statement of the computation -HMRC have never challenged this treatment in my experience. For larger amounts, over £100k, I send a letter (signed by client) off to HMRC to reduce risk.

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Replying to Ruddles:
By Yulz Peaches
18th Apr 2024 15:08

Thank you. We'll draft a letter for a client to sign and send to HMRC.

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