Income Tax (Trading and Other Income) Act 2005 section 606

Apportionment where property sold together

Section 606 deals with how to apportion sale proceeds and costs when intellectual property (such as know-how or patent rights) is sold as part of a larger transaction involving other property.

• References to the sale of property in this chapter include sales where that property is sold together with other property, and "property" includes know-how.
• All property sold as part of a single bargain is treated as sold together, even if separate prices are agreed or separate sales purport to take place for individual items.
• Where an item of intellectual property is sold together with other property, the net sale proceeds attributable to that item must be determined on a just and reasonable apportionment of the total proceeds.
• Similarly, the expenditure on acquiring or providing that item must be determined as a just and reasonable share of the total consideration given for all the property sold together.