862Sale of patent rights: effect of later cessation of tradeU.K.
(1)This section applies if—
(a)a person (“the trader”) sells the whole or part of any patent rights in carrying on a trade,
(b)by virtue of section 861 a charge under section 587 falls to be made on any person for the time being carrying on the trade in partnership,
(c)any such person permanently ceases to carry on the trade thereafter, and
(d)no person who carried on the trade immediately before the cessation continues to carry on the trade immediately after the cessation.
(2)Any amounts which would have been chargeable in later tax years are charged in the tax year in which the cessation occurs.
(3)Each partner's share (or, if the partner is dead, the share of the partner's personal representatives) of any additional amount chargeable under subsection (2) is determined in accordance with the firm's profit-sharing arrangements immediately before the cessation.
(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)For the purposes of this section “profit-sharing arrangements” means the rights of the partners to share in the profits of the trade.