Spending on R&D by the biggest UK R&D companies rose by 6% in 2007 (to £21.6bn) according to figures published on Monday by the Department for Innovation, Universities and Skills.
It took HMRC 19 days to figure out that there was a problem and, three days later, they still don’t know how to deal with it. The problem is, of course, IT-related. In this case, the online self-assessment system for individuals is still merrily allowing people to opt to have underpaid tax recovered through their PAYE code rather than hand over a cheque to HMRC. This option was supposed to end on 30 December but the IT system at HMRC refuses to accept that and no-one’s figured out where in the code the off-switch for this option is.
In RM Education plc v HM Revenue & Customs  UKVAT V20911 (decision published 9 January 2009), the VAT Tribunal confirmed that exam marking software & associated services do not qualify for the VAT exemption for education.
From IP Finance: via Tech Transfer E-News comes news that the IRS is to pay increased attention to the tax status of revenue-generating activities of universities – including income from their IP licences.
HMRC published a number of changes to the Corporate Intangibles Research and Development (CIRD) manual on January 16th. Most of the updates are minor changes, but there is some useful substantive guidance added on the changes brought in on 1 August 2008 regarding larger SMEs, dealing with a company moving from large to SME status as a result.
HMRC are expected to start targeting IP in transfer pricing enquiries this year, having been forced to back down over plans to widen the extent to which they can tax the IP income of foreign subsidiaries of UK companies. Possible new penalties – of at least 10% of the tax lost as a result of insufficient transfer pricing – are expected to be introduced in the ongoing powers and penalties review. Transfer pricing enquiries can be expensive: GlaxoSmithKline’s 14 year transfer pricing dispute with the US tax authority ended in a payment reputed to be around $3.4bn.
Amazon has lost the latest round in its attempt to get the state of New York to back down on a new law requiring out-of-state online companies to collect sales tax from customers in the state. Sales tax collection in a state is generally required by companies with sufficient connection with that state – but just what constitutes a connection varies from state to state.