Website development - FRS105

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Development costs of a new website are almost certainly a capital asset if the website directly generates revenue (section 13 HMRC Toolkit).

HMRC agree that a website is intangible under FRS105 (CIRD25145).

FRS105 requires that internally generated intangibles are expensed (Section 13.4 FRS105).

The Section 13 of the revenue's toolkit states that the tax treatment does not necessarily follow from the accounts treatment for expensed website costs - "Even though expenditure on website development may be shown in the accounts as advertising, marketing or IT costs, this does not necessarily mean that it is allowable as revenue expenditure. In order to identify the correct tax treatment the exact nature of the website costs should be examined."

Without making an election, my understanding is that tax relief on an intangible is given on the amount amortised in the accounts. If the company is unable to recognise the cost as an intangible asset, and therefore there will not be an amortisation, does this mean that it much make an election in order to get any relief? 

Am I misunderstanding something?

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By Ptynan1383
08th Sep 2020 16:25

Hi, did you work out the answer to this at all? I’ve got the same issue!

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