Corporation Tax Act 2009 section 915

UK resident companies: proceeds of sale received in instalments

Section 915 sets out how the tax charge on proceeds from the sale of patent rights is spread over time when a UK resident company receives those proceeds in instalments rather than as a lump sum.

• When a UK resident company sells patent rights and receives the proceeds in instalments, the taxable amount for each instalment is spread evenly over a six-year period beginning with the accounting period in which the instalment is received.
• The fraction taxed in each accounting period is proportionate to the length of that period relative to six years, with any remaining untaxed balance picked up in the final period.
• The company can elect to have the full taxable amount of any instalment taxed entirely in the accounting period in which it is received, rather than spreading it over six years.
• Any such election must be made within two years of the end of the accounting period in which the instalment was received, and should be made via the company's tax return or, if that is not possible, to an officer of HMRC.