Tax Forum :: Free Tax Advice

Myself and a partner built some computer software and ran it online with clients for 12 months. We then lent the software to a newly established company.

After 10 months of the new business running the company AND software were sold. 100% of the proceeds from the company sale went to another individual and we split the proceeds from the software sale 50/50. (50% for me and 50% to my partner)

The Entrepreneurs Relief conditions state that I must of owned/partnered with the "business" for at least 12 months.

Where does this leave me regarding the software which was owned and run for 22 months in total before the sale (the additional 12 months that completes the condition, but without a registered company)? Is this something I can claim on for ER?

Many thanks in advance!

In what way did you "lend" the software? Do you mean you gave then a licence at no cost to use it?

In what was was the software sold? Did you sell all proprietary rights or have you just given them a licence to use it?

it doesn’t look like it.

You haven’t really been that clear on what you have actually done.

Have you sold the shares in the company or has the company sold the business. Two very different things.

If you lent the software to the company, then the only way it will qualify for ER is if it needs the associated disposal conditions, which unfortunately, it doesn’t.

The way I read the post, he lent the software to a company that he did not own (the proceeds of the share disposal went to another individual)

The company did not own the software therefore the new owners of the company had no rights to it (but we don't know the terms under which it was lent).

He then sold the software to the same entity that bought the company (but we don't know really know what was sold)

It is possible that ER may be due, but there is insufficient information.

As mentioned, the sale of the company seems to be a red herring.

ER will only be possible if you could say you had a software business which has now come to an end. It has to look like a business (did anybody pay for use of the software, did you ever register the business with HMRC or anybody else?) and the disposal must have caused the business to cease trading.

The business does not have to have been a company (luckily as it wasn't). It could be a partnership - which this looks like.