Monthly Archives: October 2010

UK: licence fees for inventor = trading income, not employment income

XX v HMRC (and related appeals) (TC00689, released 17/9/10 but has taken some time to surface on the tribunal site) – the decision was anonymised, presumably because of the defence connection:

The First Tier Tribunal has upheld a claim by an inventor (XX) that the licence fees paid to him by a company of which he was a director were trading income, and not employment income – saving National Insurance Contributions for the company at the very least.

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UK/US: Asda-Wal*Mart transfer pricing adjustments

It looks as though Asda and Wal*Mart have succeeded in getting HMRC and the IRS both to recognise a transfer pricing adjustment on royalties – as it’s a settlement, there isn’t a lot of information about, so it isn’t wholly clear whether this was the result of direct negotiation or through invoking the mutual agreement procedures. Either way, Asda has to pay another £115m in tax, whilst Wal*Mart will get a corresponding deduction.
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EU: where to charge VAT on certain R&D activities

Kronospan Mielec sp zoo v Dyrektor Izby Skarbowej w Rzeszowie (Case C-222/09): the ECJ confirmed that where R&D services carried out by engineers are supplied  ‘on a contract basis for the benefit of a recipient established in another Member State’, they were ‘services of engineers’ and so the place of supply is the country in which their work is carried out, not the country from which they are supplied.

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UK/ECJ: no VAT on sample CDs

CDs, by William Hook - on FlickrEMI Group plc v HMRC (ECJ Case C-581/08) – EMI were seeking clarification of whether they needed to account for VAT on sample CDs provided to promoters and media businesses; the particular question was over the VAT treatment that applied when they provided several CDs to one promoter. UK VAT law allows only the first sample given to someone to be VAT-free (as a supply not for consideration) so that, where several CDs were provided to a promoter for that promoter to pass on to contacts, HMRC wanted EMI to account for VAT on all except the first CD. The matter arrived at the Commissioners in 2004, who referred the question of what constitutes a sample to the ECJ.
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