BIM35700 - Capital/revenue divide: intellectual property: contents

The capital/revenue divide has figured in a number of cases involving intellectual property rights - both in relation to income and to expenditure.

You may usefully consider an author’s fixed capital to be their brain. The fruits of the author’s endeavours (manuscripts, published material, film and other such rights, etc) represent the author’s stock in trade. Amounts received by the author for sale or exploitation of their stock in trade are likely to be revenue. The costs incurred by an author in creating works for publication are also likely to be revenue.

For legislation, which from 1 April 2002 may require the accounting entries in respect of intellectual property to be followed in computations of income for CT, even if those entries are of a capital nature, see BIM35500 onwards.

Intellectual property created or acquired on or after 1 April 2002 by a corporate taxpayer is covered by the regime introduced by FA02.

This chapter covers the following: