Section 862 | Sale of patent rights: effect of later cessation of trade

(1)This section applies if—^F1

(a)a person (“the trader”) sells the whole or part of any patent rights in carrying on a trade,^F1

(b)by virtue of section 861 amounts are chargeable to income tax under section 587 as profits of one or more persons for the time being carrying on the trade in partnership,^F1

(c)a partner permanently ceases to carry on the trade after that, and^F1

(d)no person who carried on the trade immediately before the cessation continues to carry on the trade immediately after the cessation.^F1

(2)Any amounts mentioned in subsection (1)(b) which would have been chargeable in any tax year later than that in which the cessation occurred are charged in the tax year in which the cessation occurred.^F1

(3)Repealed^F2

(4)If an additional amount is chargeable under subsection (2), the person liable may elect that the amount of income tax payable should be reduced to the amount that would have been payable on the assumptions mentioned in subsection (5).

(5)The assumptions are—

(a)that subsection (2) does not apply, and

(b)that the total of the amounts that would have been charged in later tax years is charged in equal instalments in each of the tax years—

(i)beginning with the year in which the trader received the proceeds of the sale or instalment of those proceeds, and

(ii)ending with the year in which the cessation occurs.

(6)The election must be made on or before the first anniversary of the normal self-assessment filing date for the tax year in which the cessation occurred.

(7)Repealed^F3