HMRC Brief 10/13 – guidance on when research supplies are outside scope of VAT, following withdrawal of exemption #iptax
Well, we have the shiny brand new patent box proposals coming in April anyway, so there were no big expectations of this Budget – just as well, really!
There was one ‘direct’ IP announcement – the above the line R&D relief for large companies is increased to 10%, from the originally proposed 9.1%. This doesn’t sound much of an increase, but it’s a large improvement on the 6% that the current large company relief would be worth when the 20% corporate tax rate comes into effect. A blog post on ATL is in the works …
A ‘coming soon’ announcement was also hidden in the Budget documents – the Government plans to introduce consultation on tax reliefs for the visual effects industry. Presumably these will be modelled on the film/quality tv/animation/video games reliefs that we already have, but there’s no detail yet beyond the announcement of consultation.
There were quite a few indirect announcements – things that will benefit IP companies by benefiting companies and sectors in general, including:
- the 20% corporation tax rate: a bonus for large companies, and fairly predictable
- the NICs allowance of £2,000 per business, reducing the costs of employing people
- the extension of the capital gains tax exemption on investment via SEIS: useful for startups looking for funding
- then the grants etc funding, including £1.6bn for Industrial Strategy, part of which will go into a £2.1bn fund for aerospace; a £15m competition for digital content production; and £8m for the Skills Investment Fund, focussed on the digital content sector
- and finally, various initiatives intended to make it easier to raise finance. In theory.
Looks like the third edition is now out – my copies have arrived in chambers! It can be ordered from Bloomsbury, all royalties go to TaxAid.
Yes, I know the book hasn’t been published yet – any day now, I gather. Nevertheless, the Autumn Statement has poked a hole in it already (such is the dubious pleasure of writing on tax).
As of 5th December 2012, s448 ITA 2007 has been modified so that it no longer applies to payments of non-trade patent royalties (ie: those where tax is withheld under s903 ITA 2007). As a result, there is no longer any income tax relief available for payments of non-trade patent royalties by individuals.
For more details, see the draft legislation and explanatory notes (external PDF).
The recent case of Iliffe News and Media Ltd & others v HMRC  UKFTT 696 (TC) illustrates firstly the risks of IP tax structures – get the IP law right!
The case was actually lost because the companies involved tried to transfer unregistered trademarks without also transferring the business to which they related – and you can’t do that under English law.
The Tribunal didn’t leave the judgement there; instead, they went on to look at the consequences if the taxpayer hadn’t actually got the law wrong.