Capital Gain or Sale?

claudialowe · July 2009

Don't know if I am being blonde or not!!!!

I have got a client who has an internet trading business with various domain names. Last year they sold one of the names.

Is this is a capital gain or just a sale?

Many thanks.

Claudia

burg · July 2009

This doesn't seem as straight forward as normal.

However my thoughts would be:-

When they bought the domain name it may well have just cots around £10. In which case I doubt it would have been capitalised? If this was the case I may well be inclined to just put it as a sale.

Hope this helps

claudialowe · July 2009

Hi Burg

Thanks for your reply - I agree that it is not simple - hence the question. Client is still trading (albeit at a very low level), and has b/f trading losses that can be utilised.

Will carry on scratching my brain :confused1:

Claudia

JodieR · July 2009

Have a read of UITF29 - I've been through it a number of times in the past few weeks & it's quite clear on what & when expenditure should be capitalised & what shouldn't, might be a good place to start!

T.C. · July 2009

Whether something is capitalised or not can depend on the business. For example the buying and selling of property is not capitalised if the property is purchased with a view to re-selling after renovation, but would be if the property is kept as an investment and sold later.
Are these bought with a view to selling them or as a long term investment/use?
Does that help?

claudialowe · July 2009

I think that I have finally sorted it out in my mind.

The sale was for stock and the rest was for the purchase of the domain name - so goodwill really.

It is therefore a capital gain.

The P&L and BS look odd with it as a capital gain, but look "right" as a sale - but then it would look odd from the VATman's point of view!!!!

Thanks for all the replies though.

Claudia

Capital Gain or Sale?

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