Readers' forum: Exclusivity

My client has received an offer for the software being developed through his limited company. At present the company accounts show accumulated losses of £260 000 and a debt owed to the directors of £260 000. The costs relate to the development of the software and we believe these would be allowable for corporation tax purposes.

The majority of the costs were incurred before April 2017.

The heads of terms of the sale agreement refer to the purchaser buying a licence for our client’s software. However this licence is exclusive and no term is defined. The agreement states that the purchaser intends to incorporate the software into their own products and is looking to own our client’s software.

I am concerned that if HMRC were to review this agreement the fee paid for the licence might be considered a sale of the intellectual property asset because the agreement in effect prevents...