The Research and Development (Qualifying Bodies) (Tax) Order 2012 has been approved by the House of Commons, to come into effect on February 28th, 2012. The Order updates the list of qualifying bodies for R&D purposes – contributions to qualifying bodies can be eligible for the large company R&D relief.
- 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.
- R&D tax relief increased for SMEs to 200% in 2011 and 225% in 2012
- R&D tax credit repayment no longer restricted by PAYE/NICs
- R&D large company relief to include sub-contractor costs
- Patent box to have more consultation – still 10%, still patents only, applying from 1 April 2013
- Capital allowances for short-life assets now 8 years – useful for capital expenditure that doesn’t qualify for R&D allowances, and exceeds the annual investment allowance
- Reductions in corporate tax rate useful to all companies
- Enterprise Zone changes could be attractive
- 24 new University Technical Colleges to be established
IP tax changes in Hong Kong: the Inland Revenue (Amendment) (No. 2) Bill 2011, published on 25 February 2011, proposes
The US Treasury has released the 2012 Green Book (the catchier title for the “General Explanations of the Administration’s Fiscal Year 2012 Revenue Proposals” – the 2012 US Budget!). There are three key IP-oriented measures proposed. The first, discussed below, is taxation of “excess returns” on intellectual property. The second, to be discussed in a following blog post, seeks to limit shifting of income through IP transfers. Finally, and also to feature in a future post, is the enhancement and making permanent of the R&E (research and experimentation) tax credit.
Continue reading →
The Government has finally enacted (in Finance (No.2) Bill 2010, which will become Finance (No.3) Act 2010, a relaxation for small and medium-sized companies’ (SMEs) R&D tax relief by removing the requirement that they own any intellectual property that results from the R&D.
Continue reading →
- Following consultation on design, the Government will introduce a tax relief for the UK video games industry, subject to state aid approval from the European Commission. No more detail than that, but it will presumably be similar to the film/sound recordings reliefs.
- The Government is creating a £270 million Higher Education Modernisation Fund in 2010-11. This fund will enable universities to identify and drive efficiencies in the sector and fund an extra 20,000 undergraduates on courses starting in September 2010, with priority given to key subjects like science, technology, engineering and mathematics.
- A little more news on the patent box announced in the 2009 Pre-Budget Report: the Government will work with business to design a practical and competitive regime for patents to support the UK’s strengths in innovative industries. This will include looking at how to identify and value embedded patent income and how to give relief to acquired patents. In addition to patents granted after legislation is passed in 2011, the consultation will also consider how to include patents not yet commercialised at that point, and how the regime will apply to equivalent overseas patents held by UK companies. The Government will be consulting with business over the summer.
The Treasury’s multinational business forum has the UK’s controlled foreign companies (CFC) rules back onto its agenda. The CFC rules are intended to stop UK companies routing passive income to subsidiaries in low tax jurisdictions overseas – passive income can include royalties from licences of intellectual property (amongst other forms of income). The CFC rules were originally intended to be updated as part of the legislation bringing in an exemption from corporation tax for foreign dividends, but the proposed changes were so broad as to be unworkable and would have meant that UK companies would be penalised for owning any subisidiaries with IP; the Treasury then postponed the CFC rules update to have more time to consult with business.