consultation

consultation / other / R&D — No Comments
20
Mar 13

UK: Another Budget, a bit more for IP businesses

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.

consultation / R&D — No Comments
28
Mar 12

UK: Consultation on ‘above the line’ R&D credit published

The consultation paper on the proposed ‘above the line’ R&D tax credit has been published (pdf). Key points from a speed-read are below (responses due by 29 June 2012 – we have some time!).

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consultation — No Comments
12
Jan 12

UK: HMT Patent Box slides published

HM Treasury have published the slides from their latest presentation on the patent box – nothing particularly startling in them.  I’m working on a podcast on the patent box at the moment, but it’s taking second-place to finishing the update to the Taxation of Intellectual Property book for Bloomsbury!

consultation / legislation — No Comments
07
Dec 11

UK: patent box – the least you need to know*

  • The proposals have been pretty much reworked in some detail into the draft legislation
  • The reduction in the presumed routine profit from 15% of specific expenses to 10% of general overheads means this is less mad than it was, although it’s still pretty silly for patent licensing businesses such as biotechs
  • The separation out of the active management requirement is welcome, as it means biotechs etc that licence out their R&D results can still qualify
  • A bonus for small companies is that the relief calculation uses the main CT rate so they get a bit more relief than they would if the small co’s rate was used in the calculation
  • The doubling of the de minimis to £1m before complex paperwork has to be submitted is useful
  • BUT: it’s still unlikely to appeal to anyone much other than the multinational pharmaceutical companies, despite the changes. And still does absolutely nothing for any other substantive form of IP.
* well, the least it seems on first reading that one might want to know …
consultation / R&D — No Comments
10
Nov 11

UK: large companies looking for R&D credit changes

In a report (pdf, on the SMMT website) published this week (and you have to love a report that starts with a quote from Julius Caesar), the manufacturing & motor associations EEF and SMMT call for changes to the R&D tax relief. They’re looking for a “cash benefit or redeemable credit at the point R&D costs arise”, rather than a “relatively opaque offset against corporation tax payments”.

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consultation / R&D — 2 Comments
05
Aug 11

UK: Draft guidance on R&D relief for production costs

Three months late (it was promised for mid-May), the draft of the revised HMRC guidance at CIRD81350 on “production” for the purposes of the R&D tax reliefs has finally been published (PDF).

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consultation — No Comments
21
Jul 11

UK: CFC reform – new consultation

Controlled foreign companies (CFCs) in low tax jurisdictions are a headache for tax authorities, with the potential for profit to be earned at a low tax rate and not contribute to the coffers of the government of the parent company’s location.  The potential for profits to be perhaps relocated to the lower tax jurisdiction has resulted in rules to stop such relocation.  In the US, the rules are known as Subpart F; in the UK, they are simply the CFC rules.

In both cases, the result of the rules is some or all of the profits of the CFC are attributed to the parent/shareholder, and so become subject to that in that way in the parent/shareholder’s country.  In the UK (and elsewhere) these rules haven’t quite kept up with the changes in the way in which businesses – particularly multinationals – are run, and it has become clear over the last decade or so that something needs to change.

Perhaps unsurprisingly, income from IP is one of the concerns with CFCs – IP doesn’t pass any border controls when you move it from one owner to another.

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consultation / other / R&D — No Comments
15
Jun 11

UK: R&D consultation, next round

In addition to the patent box paper, the Treasury also published the next round of R&D consultation – this is rather more a summary of responses to the last consultation than new information.

In summary:

  • not ruling out ‘above the line’ R&D relief/credit but the Government still needs to be convinced
  • large company subcontractor costs to qualify for the subcontractor only where the subcontractor is aware that it is qualifying R&D and has evidence to this effect
  • no plans to extend qualifying expenditure to cover (eg) rent of premises used for R&D
  • draft legislation in the Autumn to allow a wider range of externally provided workers to qualify
  • no plans to restrict internally created software from being qualifying costs
  • improved guidance on whether prototypes will be qualifying R&D – whether the ‘uncertainty’ principle applies
  • plans for a pilot scheme will be brought in during the Autumn so that small companies and start-ups can get advance assurances that can be relied on in making R&D claims for several years

The Government is looking for specific responses (by 2 September 2011) on:

  • qualifying indirect activities: should the relief be retained?  (QIA are hard to define and harder to get relief for)
  • should there be some form of certification or election process to provide certainty for subcontractors as to whether the work they are doing is R&D?
  • does the removal of the PAYE/NICs limit on the repayable credit require any safeguards?
  • does the ‘going concern’ definition need to be reformed, to make it closer to that for EIS/VCT?
consultation / other — No Comments
15
Jun 11

UK: Patent box – latest consultation paper

The Treasury has published (a few days later than originally advertised) the next round of consultation on the patent box (pdf).

In summary:

  • extended to plant variety rights, data exclusivity and supplementary protection certificates
  • will apply to UK and EPO patents only
  • will apply to all UK and EPO patents, no matter when commercialised or granted
  • to be phased in over 5 years, from 2013/14 – full benefit not until 2017/18
  • a seriously complex round of computations will be involved, with analysis of income and expenses across the company and possibly by division required

Responses to the consultation are requested by 2 September 2011.

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consultation / international / transfer pricing — No Comments
04
May 11

OECD: Intangibles project

The OECD Working Party looking at the transfer pricing of intangibles, including intellectual property, met in late March in Paris. The OECD has now published details, including the supporting presentations of that meeting.

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