-
R&D credit, selling option on the product
Yes, I'll run this by my accountant when he's back in. But he was out yesterday when this came up, and is out all of next week.
We're developing something. It's a legit R&D project eligible for the R&D tax credit.
One of my clients loves the idea. They want to buy it from us when we're done. Actually, they want to buy it from us now, but they'd discount it for the chance of failure, and it isn't going to fail, and I want full price. They want to pay us an amount now for the option to buy it when completed, so we don't sell it to one of their competitors. We're willing to consider that.
The rules for the R&D credit are different, and you get a lower credit, if you are subcontracted. I'm of the view that selling an option to buy the product is not a subcontracting relationship, but I suppose a hostile HMRC inspector might argue that selling the right to buy it is effectively giving up ownership and making us subcontractors, thus meaning the R&D credit should be based on the subcontractor rules.
Anyone encounter anything like this before or know of anything in the rules surrounding the R&D credit that address this? My guess is the rules aren't specific about something like this and it's a matter of opinion, but if anyone has any hard facts, I'm interested.
Leave a comment: