Corporation Tax Act 2009 section 914

UK resident companies: proceeds of sale not received in instalments

Section 914 sets out how the taxable amount from a sale of patent rights is spread over time where the company is UK resident and receives the sale proceeds as a lump sum rather than in instalments.

• Where a UK resident company sells patent rights and receives the full proceeds in one go (not in instalments), the taxable amount is spread evenly over a six-year period beginning with the accounting period in which the proceeds are received.
• The fraction taxed in each accounting period is the proportion that the accounting period bears to six years, with any remaining balance taxed in the final period.
• The company may elect to have the entire taxable amount charged in the single accounting period in which it receives the proceeds, rather than spreading it over six years.
• Any election to accelerate the charge into one period must be made within two years of the end of the accounting period in which the proceeds were received.