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HMRC internal manual

Corporate Intangibles Research and Development Manual

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HM Revenue & Customs
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Core computational rules: realisation of assets: meaning of realisation proceeds

CTA09/PART8/S739

Provision

The proceeds of realisation are, subject to tax adjustments, the amount recognised for accounting purposes as those proceeds, net of the incidental costs.

Accounting treatment

That amount may well be set in a company’s accounts against the book value of the asset realised to show on the face of those accounts only a profit or loss on disposal. But the proceeds for the purposes of Part 8 remain the figure before it is netted off in this way.

Tax adjustments

The net proceeds may be subject to adjustment for tax (see CIRD12030), for example under the market value rule described in CIRD45030 or the disincorporation relief provisions described in CIRD43000+.

The incidental costs that are allowable in this way are not further defined but the various rules prohibiting or deferring deductions for certain types of expenditure described in CIRD12580 apply. Expenditure on entertaining buyers of a company’s intangible assets is perhaps the most likely type of disallowable expenditure to occur in practice.

Other relevant guidance

See CIRD13245 for how the net proceeds of sales referable to an individual intangible asset are identified where a number of assets are realised together and for the link with the acquirer’s tax computations.

See CIRD12550 for the treatment of the incidental costs incurred in connection with the intended realisation of an asset that turns out to be abortive.