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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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Hi there, I'm a screenwriter that has options out on two

Customer Question

Hi there,
I'm a screenwriter that has options out on two films [I wrote the scripts, another company is paying me]. I'm now doing end of year accounts, and I'm wondering if these film options count as intangible assets?
Athena
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello Athena, I'm Keith and happy to help you with your question.
I will not bore you with the HMRC advice on this subject, even I find it confusing. However, the general tenor of HMRC information indicates that if these options are not traded then they do not comprise intangible assets. It throws everything back of generally accepted accounting practice. You have not received the cash for these options so they do not comprise income for the current year and you might never get paid if they are not taken up.
I would tend, although, of course, making a note in your own mind of their presence, not include them in your current year accounts at all. If you did and the matter fall through you would be taxed on something which never materialized,
I do hope I have derived an equitable solution for you to follow.
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Customer: replied 2 years ago.

Thanks, ***** ***** wit... x

Expert:  bigduckontax replied 2 years ago.
Thank you for your excellent support.
A bit more digging has revealed the following gem from HMRC advice CIRD30525:
'Under UK GAAP practice smaller companies are entitled (but not required) to draw up their accounts (apart from consolidated accounts) under the provisions of the FRS for Smaller Entities rather than under the individual FRS, including FRS7, FRS10 and FRS11.
The objective of the FRS for Smaller Entities is to provide an accounting framework for smaller reporting entities which provides adequate information about their financial position, performance and financial adaptability while recognising that the accounting requirements may not need to be so detailed as for larger entities.'
You will note that as a small enterprise you are not required to follow the Generally Accepted Accounting Principles so I was on the right track with my advice.

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