Section 590: UK resident sellers: spreading rules
2294.This section sets out the spreading rules where the person chargeable under section 587 is resident in the United Kingdom. It is based on section 524 of ICTA.
2295.Section 524 of ICTA imposes a charge to tax where a person sells all or any part of any patent rights and the net proceeds of sale consist wholly or partly of a capital sum. There are separate charges for sellers who are resident in the United Kingdom (this section) and non-UK resident sellers of UK patent rights (sections 591 and 592).
2296.For both UK residents and non-UK residents, tax is charged (depending on whether or not an election is made) either:
in respect of the whole sum, for the tax year in which it is received, or
on one sixth of the sum for that year and for each of the next five tax years.
2297.A “sum” to which the above rules apply could be either the whole sale proceeds or an instalment of the proceeds. So, for instance, where a UK resident seller has not elected otherwise, any receipt of an instalment of sale proceeds charged under the source legislation (section 524(1) of ICTA) would trigger the start of a six year period over which the charge for that instalment would be spread.
2298.In this Chapter, the way in which the rules on the timing of the tax charge apply to instalments is dealt with expressly.
2299.Subsection (3) allows the person chargeable to elect to be taxed on the whole amount for the first tax year, subject to the time limit for the normal self-assessment filing date for the tax year concerned (see also subsection(6)).
2300.Subsection (6) contains the time limit for elections under this section. The source legislation refers to “an officer of the Board” and the effect of this is maintained by section 878(4) of this Act which draws attention to the rules in TMA, which apply for the purposes of this Act. Those rules require elections to be made to “an officer of the Board”.