The distinction between revenue and capital expenditure on software is not always straightforward. The following is the text of a Tax Bulletin article from November 1993 concerning the tax treatment of computer software (IR Int. 55). The article is reproduced in full in the Business Income Manual at BIM35805.

Software acquired under licence

This is the way that nearly all off-the-shelf software is acquired nowadays. The treatment of expenditure of this nature depends on the form the consideration for the licence takes.

Regular payments akin to a rental

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